NATURAL  MONEY 

THE  PEACEFUL  SOLUTION 

BY 
JOHN  RAYMOND  CUMMINGS 


NEW  YORK 

THE  BANKERS  PUBLISHING  CO. 
1912 


To  the  millions  who  are  earnestly  seeking  a  way  out  of 
social  difficulties;  mho  Tcnorv  that  something  is  radically 
wrong  in  our  institutions  but  know  also  that  these  institu- 
tions hold  the  most  precious  heritages  of  the  race;  who  are 
as  determined  to  conserve  the  good  as  to  eliminate  the  bad; 
who  are  striving,  to  inaugurate  universal  brotherhood;  who 
are  more  inspired  by  what  is  to  be  than  embittered  by 
what  is,  this  volume  is  hopefully  dedicated. 

THE  AUTHOR. 


Copyright  1912,  by  the  Bankers  Publishing  Co.,  New  York 


CONTENTS 

PAGE 

PREFACE    5 

CHAPTER  I 
NATURAL  LAWS  ARE  GOD'S  LAWS— Old  Analogy  of 

Money  to  Blood  Circulation  Extended 9 

CHAPTER    II 

NATURAL  MONEY — How  It  Comes  Into  Existence. . .       17 

CHAPTER    III 

THE  QUESTION  OF  REGULATION — Must  Be  Auto- 
matic ;  Only  by  the  Demands  of  Trade,  and  Free 
Even  from  Official  Influences 24 

CHAPTER    IV 

ECONOMIC     EMANCIPATION — Showing     that     Money 
Should    Be    an    Expression    of    the    Labor    "Set 
Free"  from  Previous   Requirements;   an  Expres- 
sion of  the  Degree  of  Economic  Emancipation.  . .        35 
CHAPTER  v 

JUSTICE  AND  MORALITY  OF  THE  SYSTEM 42 

CHAPTER  VI 

QUALITIES  OF  A  PERFECT  MONEY 49 

CHAPTER  VII 
COST  OF  COIN  MONEY 51 

•       CHAPTER    VIII 

DISASTROUS  EFFECTS  OF  FLUCTUATION  IN  THE  VALUE 
OF  GOLD — The  English  Panic  of  1847 — Relief 
Found  in  Ten  Minutes  When  Law  was  Suspended  63 

CHAPTER    IX 

CONSTANCY    OF    VALUE — Its    Effects    on    Business, 

Wages  and  Labor  Troubles 73 

CHAPTER    X 

INCONVERTIBLE  CURRENCY — Showing  that  the  Real 
(Though  Not  Legal)  Money  in  Coin  Systems  is 
Mostly  Inconvertible  and  Subject  to  Sinister 
Influences  84 


20030   9 


CHAPTER   XI 

REDEMPTION — Not  a  Government  Obligation — Good 
Money  Does  Not  Need  to  Be  Reinforced  by 

Government    Guaranty 96 

CHAPTER  XII 

LEGAL   TENDER 110 

CHAPTER  XIII 
THE    STREAM    OF    CURRENCY — Causes    of    Natural 

Money's   Issue 115 

CHAPTER   XIV 

VOLUME — Estimates  as  to  the  Quantity  of  Natural 
Money  that  Will  Remain  Outstanding,  Being 

Absorbed  as  an  Agency  of  Saving 124 

CHAPTER  xv 
APPORTIONING  TAXES — Nature's  Automatic  Toll  Gate     144 

CHAPTER  XVI 
NATURAL  MONEY  NOT  THE  LABOR  CHECK  SYSTEM..     153 

CHAPTER  XVII 

BUYING  THE  LAND — Purchase  of  Land  and  Public 
Utilities  at  Fair  Price  to  Be  Accomplished  With- 
out Injustice  or  Debt 156 

CHAPTER  XVIII 

ABOUT  GROUND  RENT 163 

CHAPTER  XIX 

INTRODUCING  SYSTEM  IN  UNITED  STATES 168 

CHAPTER  XX 

A  RESERVOIR  OF  LABOR — Showing  How  System  Saves 
Present  Enormous  Waste  and  Provides  Labor  for 

Extra   Private   Demand 176 

CHAPTER  XXI 

THE  RIGHT  OF  GOVERNMENT ,     181 

CHAPTER  XXII 
BANKING    190 

CHAPTER  XXIII 
SUPPOSE — Common   Sense   Method   of   Dealing  with 

the  Situation  in  Time  of  Distress 197 

CHAPTER    XXIV 

"HE  THAT  HATH  EARS  TO  HEAR,  LET  HIM  HEAR" 
— An  Allegory  of  Capital,  Labor,  Monopoly  and 
Interest  203 


PREFACE 

TN  the  following  pages  I  undertake  to  prove 
A  these  propositions: 

That  there  is  a  natural  money. 

That  its  adoption  will  make  panics  impossible. 

That  after  a  term  of  years  natural  money  will 
bring  our  banking  system  to  such  condition  that 
every  bank  will  be  able  to  pay  all  its  obligations 
instantly.  Banks  will  then  be  the  accountants, 
custodians  and  clearing  houses  for  all  the  people. 

That  in  the  course  of  time  (probably  within 
fifty  years)  natural  money  will  put  all  business 
on  a  cash  basis. 

That  in  a  like  period  the  interest  rate  for 
property  loans  will  fall  to  one  or  two  per  cent, 
and  probably  will  disappear  from  money  loans. 

That  natural  money  will  enable  the  govern-- 
ment  to  take  over  all  the  land  and  all  the  pri- 
vately owned  public  utilities  on  terms  very  lib- 
eral to  present  owners,  without  issuing  a  bond 
and  without  hardship  or  injustice. 

That  it  will  enable  the  government  to  build 
during  the  same  period  a  million  miles  of  high- 
way at  a  cost  of  $10,000  the  mile. 

To  irrigate  and  drain  a  large  proportion  of 
the  area  needing  irrigation  and  drainage. 

To  develop  tens  of  millions  of  horse  power 


6  PREFACE 

from  water  and  distribute  it  throughout  the 
country. 

To  develop  internal  water-ways  on  a  scale 
hitherto  unattempted  and  undreamed  of. 

That  it  will  raise  wages  and  end  strikes  and 
lockouts. 

That  it  will  establish  natural  wages  and  se- 
cure absolute  equity  as  between  employers  and 
employes. 

That  it  will  pay  off  the  government  debt  and 
make  future  debt  impossible. 

That  it  will  end  our  present  industrial  war- 
fare and  bring  all  now  discordant  classes  into 
harmonious  cooperation,  inaugurating  an  era 
of  progress  and  prosperity  such  as  the  world 
has  not  even  conceived  of. 


I  am  aware  that  these  statements  must  be 
astounding  to  those  who  regard  periodic  disaster 
as  in  the  "natural  course  of  events";  who  have 
accepted  the  well  worn  formula,  "you  can't 
change  human  nature,"  not  only  as  a  refutation 
of  faith  but  as  a  denial  of  hope.  They  are 
astounding,  but  not  more  so  than  was  Galileo's 
statement  that  the  earth  revolves  on  its  axis. 

Not  more  astounding  than  the  statement,  had 
it  been  made  a  century  or  two  ago,  that  plagues 
would  cease  to  decimate  the  race  before  the  end 
of  the  nineteenth  century. 


PREFACE  7 

Not  even  more  astounding  than  the  statement 
Philip  Armour  may  have  made  to  his  associates 
forty  years  ago:  "We  will  make  a  hundred  mil- 
lion dollars  from  the  hair,  hoofs,  horns,  bones 
and  intestinal  contents  of  slaughtered  animals." 

We  think  we  are  doing  a  great  work  to  build 
a  Panama  Canal  in  ten  or  fifteen  years.  We 
are.  It  is  great  to  build  it,  how  long  soever  it 
may  take,  but 

We  are  wasting  a  Panama  Canal  every  three 
months. 


First  of  all  I  beg  the  reader  to  free  himself 
from  the  idea  that  the  money  question  is  diffi- 
cult. It  is  not  if  we  start  right,  but  it  is 
impossible  of  solution  if  we  have  not  the  foun- 
dation truth,  just  as  the  science  of  astronomy 
was  impossible  until  we  learned  that  the  earth 
revolves  and  the  sun  is  the  center.  The  science 
of  money  hitherto  has  been  like  the  Ptolemaic 
system  of  the  universe  in  its  makeshift  complica- 
tions. The  true  science  is  simple;  easy  to  under- 
stand and  easy  to  apply. 

JOHN  RAYMOND  CUMMINGS. 


I 
NATURAL  LAWS  ARE  GOD'S  LAWS 

"T\ISCOVERY  of  and  conformity  to  the  nat- 
•"•^  ural  law  is  all  of  wisdom,  and  the  begin- 
ning of  wisdom  is  faith  that  Nature's  laws 
(God's  laws)  are  all-sufficient;  that  no  relation 
or  condition  can  emerge  for  which  there  is  not 
a  natural  law,  a  natural  mode  of  procedure. 

It  were  impious  to  say  that  God  put  a  hu- 
manity into  an  evolutional  school  of  life  in  which 
it  would  meet  unsolvable  conditions.  There  are 
innumerable  phenomena  we  shall  probably  not 
be  able  to  solve  for  ages,  perhaps  not  in  this  life, 
but  to  assume  that  our  everyday  life  in  this 
school  should  conform  to  rules  of  conduct  im- 
possible for  us  to  discover  while  we  still  need 
them,  is  to  impute  imperfection  if  not  malevo- 
lence to  the  Ruler  of  the  universe. 

In  the  evolution  of  a  humanity,  if  government 
is  desirable  it  will  emerge  naturally.  If  it  in- 
volve expense,  as  we  all  know  it  does,  there  is 
a  natural  source  of  revenue  for  the  purpose  as 
certainly  as  mother's  milk  is  food  for  the  babe, 
as  was  shown  more  than  thirty  years  ago  by  the 
elder  George.  If  society  requires  to  use  money, 
there  is  a  natural  money. 

By  discovering  a  natural  method  of  taxation 


10  NATURAL  MONEY 

Henry  George  breathed  life  into  a  science  that 
had  borne  little  but  Dead  Sea  fruit.  He  showed 
the  system  that  should  prevail,  but  his  method 
of  inaugurating  it  impressed  many  persons  as 
not  free  from  inequity  and  serious  hardships. 
For  years  I  have  advocated  his  method,  with 
some  modifications  to  ease  the  hardships,  not 
knowing  of  any  way  to  avoid  them  altogether. 
I  have  discovered  such  method,  a  method  so 
simple  and  easy  it  seems  evident  the  natural  law 
foresaw  our  gravest  errors  and  beneficently 
provided  an  exit  from  situations  that  would 
otherwise  seem  almost  hopeless. 

Only  as  we  discover  the  natural,  the  perfect, 
mode  of  procedure  do  we  advance  in  the  school 
of  life;  and  as  we  do  this,  more  and  more  we 
shall  find  romance,  even  poetry,  in  the  sciences 
we  have  considered  dry  and  dull.  If  it  be  not 
divorced  from  human  life,  the  science  of  politi- 
cal economy  will  be  found  of  transcendent  in- 
terest, for  humanity  has  written  its  autobiog- 
raphy in  its  material  progress,  and  a  thrilling 
story  it  is. 

AN  OLD  ANALOGY  EXTENDED 

Money  has  been  aptly  called  the  blood  of  the 
economic  body.  The  analogy  is  even  more  far 
reaching  and  forcefully  significant  than  has  been 
shown,  for  with  the  money  systems  in  use  the 
analogy  is  largely  to  pathological  conditions. 


THE  PEACEFUL  SOLUTION      11 

In  the  human  body  we  have  the  condition  of 
anemia  or  deficiency  of  blood,  and  when  this 
condition  obtains  the  vitality  of  the  patient 
dwindles  until  it  ends  in  collapse  and  death  if 
it  is  not  corrected.  On  the  other  hand,  hyper- 
emia,  too  much  blood,  is  not  an  infrequent  con- 
dition, and  then  we  have  dizziness,  vertigo  and 
even  apoplexy.  The  blood  is  the  life,  but  for 
health  there  must  be  the  normal  supply;  neither 
too  little,  lest  inanition  and  collapse  supervene, 
nor  too  much,  lest  a  delicate  blood  vessel  burst, 
a  clot  form  on  the  brain  and  the  whole  organ- 
ism be  thrown  out  of  balance  and  wrecked. 

Is  there  anything  like  these  in  the  economic 
body?  Is  not  a  money  stringency,  when  the 
agency  of  exchange  cannot  be  had  for  the  nor- 
mal activities  of  the  business  world,  the  anemic 
condition  of  the  economic  body?  And  do  we 
not,  at  such  time,  perforce  do  just  what  the 
anemic  patient  does,  relapse  into  a  state  of  in- 
anition, of  half -life,  waiting  for  nature  to  bring 
vigor  and  activity  again?  And  is  not  the  too 
great  supply  of  money,  the  inflation  of  credits, 
a  condition  of  hyperemia ;  too  much  blood  in  the 
economic  body?  And  is  not  the  wild  specula- 
tion we  then  have  the  vertigo  of  the  economic 
body,  and  as  sure  to  end  in  apoplexy  and 
disaster? 

In  the  condition  of  hemorrhage  sometimes  the 
heart  of  the  patient  collapses  for  want  of  sum1- 


12  NATURAL  MONEY 

cient  blood  to  work  on,  and  when  such  result 
threatens,  the  physician  opens  the  circulation 
and  pumps  into  it  a  saline  solution.  It  is  not 
blood;  it  does  not  nourish  the  patient,  but  it  fur- 
nishes material  for  the  heart  to  work  on,  thus 
preventing  collapse  and  gaining  time  for  nature 
to  right  things. 

Even  this  resort  of  modern  science  in  coping 
with  bodily  disorder  has  its  parallel  in  the  eco- 
nomic body,  for  when  general  distrust  has 
demonetized  a  large  part  of  the  credit,  which  is 
the  real  though  not  legal  money,  thus  reducing 
the  economic  blood  to  a  low  ebb,  the  Doctors 
of  Finance  are  called  in  and  a  saline  solution  in 
the  form  of  clearing-house  certificates  is  in- 
jected into  the  veins  of  commerce. 

It  was  a  great  discovery  of  modern  medicine 
that  nature  can  be  induced  to  go  on  operating 
that  marvelous  mechanism,  the  human  heart, 
winking  that  she  is  hoodwinked  into  accepting 
mere  liquid  quantity  for  blood;  and  the  dis- 
covery that  we  can  do  the  like  when  our  eco- 
nomic blood  is  at  ebb,  is  also  great,  but  it  is  a 
makeshift. 

Among  men  are  those  known  to  physicians  as 
"bleeders,"  whose  blood  lacks  the  coagulating 
quality.  As  a  result  of  this  defect,  the  slightest 
wound  or  a  nasal  hemorrhage  may  prove  fatal. 
Is  there  any  analogy  to  this  in  our  "blood  of 
commerce"?  Is  it  not  true  that  our  fluid  credit, 


THE  PEACEFUL  SOLUTION      13 

which  constitutes  about  85%  of  the  real  medium 
of  exchange,  is  of  such  character  that  even  a 
trivial  accident  is  liable  to  induce  a  hemorrhage 
from  the  effects  of  which  the  economic  body 
will  require  years  to  recover?  Have  we  for- 
gotten 1873,  1893  and  1907?  And  even  if  the 
saline  solution,  the  recent  discovery,  does  miti- 
gate the  evil,  shall  we  rest  content  with  mitiga- 
tion and  let  the  patient  still  remain  a  "bleeder"  ? 
Shall  we  not  rather  cure  the  defect  and  make 
this  economic  "bleeder's"  blood  coagulate  and 
stop  the  flow  when  bleeding  begins? 

How  shall  it  be  done?  The  rapid  and  con- 
tinued running  out  or  disappearance  of  the 
credit  volume  is  the  bleeding,  and  in  this  eco- 
nomic pathological  case  we  find  a  condition  not 
paralleled  so  far  as  I  know  in  the  human 
"bleeder,"  for  in  the  economic  body,  not  only 
does  this  uncoagulable  blood  run  away,  but  that 
small  portion  of  economic  blood,  the  real  money, 
becomes  stagnant  and  circulates  sluggishly  or 
not  at  all,  a  large  part  of  it  being  congested  in 
the  vaults  of  hoarders. 

This  is  the  analogy  of  present  money  systems 
to  the  blood  circulation,  logically  extended. 
Heretofore  it  has  been  stated  only  in  general 
terms,  and  with  no  suspicion  of  the  whole  truth. 
Happily  the  analogy  of  Natural  Money  to  the 
blood  is  a  more  pleasing  picture;  not  a  likeness 
to  conditions  of  disease,  but  of  health  and  vigor. 


14  NATURAL  MONEY 

In  the  body  the  blood  goes  from  the  heart  to 
the  lungs  to  be  oxygenized  and  purified,  and  in 
its  circuit,  to  all  tissues  of  the  body  to  carry 
food  to  every  cell  and  gather  up  the  broken 
down  and  now  poisonous  material,  passing 
through  the  excretory  organs,  where  the  refuse 
is  eliminated,  and  back  again  to  the  heart  and 
lungs.  This  circulation  is  so  rapid  that  the 
whole  volume  of  the  blood  passes  through  the 
heart  in  about  forty-eight  seconds,  yet  men's 
hearts  beat  and  this  rushing  torrent  of  life 
flowed  on  for  thousands  or  millions  of  years 
before  man  discovered  that  his  blood  circulated. 
Is  there  any  wonder  he  failed  to  solve  the  prob- 
lem of  the  circulation  of  the  economic  body? 
The  marvelous  metabolism  of  life  is  still  a  mys- 
tery; we  know  only  the  mechanics  of  it.  It  is 
as  if  our  municipal  water  and  sewer  systems 
were  united  into  one  closed  system  and  gave 
back  to  us,  pure,  sweet  and  wholesome,  every 
drop  of  water  not  actually  consumed. 

In  the  nurture  of  the  economic  body  it  is  as 
if  there  were  two  streams,  one  running  from  the 
thousands  of  springs  of  production  to  the  mil- 
lions of  points  of  consumption,  and  a  returning 
stream  from  the  millions  of  points  of  consump- 
tion to  the  tiiousands  of  points  of  production. 
They  are  supplemental  and  constitute  a  closed 
system  in  the  economic  body.  The  goods  in  the 
stream  of  supply  are  the  arterial  blood,  the 


THE  PEACEFUL  SOLUTION      15 

returning  stream  of  credit,  the  venous  blood. 

But  in  this  economic  circulatory  system  we 
behold  another  miracle.  I  said  it  is  as  if  there 
were  two  streams,  but  the  fact  is  there  is 
only  one  network  of  streams,  and  the  careful 
observer  will  not  fail  to  note  that  these  vessels 
of  value,  the  dollars,  the  carriers  of  utility  from 
the  springs  of  production  to  the  points  of  con- 
sumption (the  social  cellular  units),  all  travel 
in  the  opposite  direction  from  that  of  their 
cargoes.  It  is  as  if  they  were  negative  ships, 
and  for  positive  effect  reversed  their  direction, 
or  moved  their  cargoes  by  a  force  like  magnetic 
attraction,  the  two  objects  moving  together  till 
they  meet  in  exchange  and  then  remaining  static 
until  acted  upon  by  another  "moving  to  ex- 
change." 

As  in  the  human  body  the  flow  of  blood  to 
any  given  part  is  induced  by  the  demands  of  its 
activity,  so  in  the  economic  body;  and  as  in  the 
human  body  this  activity  may  go  to  the  point  of 
injury  or  even  destruction,  so  in  the  economic 
body,  as  we  have  all  observed. 

And  in  the  body  we  observe  the  wisdom  and 
foresight  of  Mother  Nature,  who  is  a  provident 
dame  and  well  worthy  our  confidence  and  emu- 
lation. She  is  no  spendthrift,  living  from  hand 
to  mouth,  nor  does  she  allow  her  children  to  be, 
in  the  most  vital  matters.  By  all  sorts  of  de- 
vices, almost  as  if  by  way  of  the  fourth  dimen- 


16  NATURAL  MONEY 

sion,  she  packs  away  in  the  bodily  recesses  of 
warm  storage,  by  her  mysterious  atomic  mason- 
ry, here,  there  and  everywhere,  a  reserve  for 
any  unusual  demand  of  joy  or  grief,  and  finally 
for  old  age. 

And  she  is  not  only  provident  but  esthetic, 
and  uses  this  reserve  to  effect  that  beauty  of 
outline  we  all  so  much  admire  that  sometimes, 
having  squandered  the  reserve,  or  being  unrecon- 
ciled to  approaching  age,  we  audaciously  at- 
tempt to  counterfeit  it.  But  even  nature  has 
found  situations  in  which  beauty  has  been  put 
aside  for  utility.  The  camel,  the  ship  of  the 
desert,  is  altogether  homely.  He  is  an  architec- 
tural monstrosity,  and  his  sky-line  is  an  offense 
to  the  eye,  but  that  supra-spinal  hump  is  his 
savings  bank;  a  blood  pudding  nature  put  in 
his  haversack  when  she  bade  him  cross  the  sandy 
plain. 

Is  there  anything  like  this  in  our  social  body? 
Can  we  save  without  waste,  in  economic  blood? 
Not  under  our  present  systems  of  money.  We 
can  save  without  waste  only  in  credit,  and  not 
in  money,  the  best  credit. 

Natural  Money  will  cure  this  defect  and  con- 
nect every  provident  individual  with  the  pulsat- 
ing economic  heart,  as  it  were  by  an  umbilical 
cord  that  shall  endure  to  the  end. 


n 
NATURAL  MONEY 


is  a  generic  expression  of  credit; 
of  perfectly  and  permanently  fluid  credit; 
the  agency  by  which  exchanges  are  effected  and 
the  benefits  of  economic  cooperation  realized. 

By  the  division  of  labor  production  is  enor- 
mously increased,  for  the  reason  that  a  man  can 
produce  many  times  as  much  of  a  single  article 
as  he  can  of  several  articles,  partly  because  the 
simpler  movements  required  become  habitual 
and  almost  automatic. 

Not  only  can  he  produce  a  much  larger  total 
in  a  given  time,  but  there  is  a  great  saving  also 
in  the  fact  that  he  requires  fewer  tools  than  for 
a  varied  production.  It  is  probably  within  the 
truth  to  say  that  the  total  production  under 
division  of  labor  as  we  have  it  is  from  five  to 
ten  times  what  it  would  be  under  the  methods 
prevailing  five  hundred  years  ago,  though  even 
then  there  was  considerable  diversity  of  employ- 
ment. 

But  with  division  of  labor  must  come  ex- 
change of  products  in  order  that  each  person 
may  have  a  large  variety  of  tilings  to  use,  and 
when  two  persons  meet  for  the  purpose  of  ex- 
change it  must  be  a  haggling  contest  or  there 


17 


18  NATURAL  MONEY 

must  be  some  basis  upon  which  to  determine 
how  much  each  must  give  of  what  he  has  for 
what  he  wants. 

Such  method  is  not  only  so  wasteful  of  time 
that  it  well-nigh  or  quite  neutralizes  the  gain 
by  division  of  labor,  but  it  is  also  productive  of 
mutual  irritation. 

In  addition  to  the  difficulty  of  making  ex- 
changes by  barter,  there  is  also  the  great  diffi- 
culty of  bringing  together  two  persons  whose 
possessions  and  desires  are  both  complement al. 
John  may  have  a  coat  which  he  wishes  to  ex- 
change for  a  hat,  a  supply  of  groceries  and  a 
pair  of  shoes.  It  will  probably  take  him  as  long 
to  find  a  customer  who  has  what  he  wants  and 
wants  what  he  has,  as  it  took  him  to  make  the 
coat. 

These  difficulties  are  rather  imaginary  than 
real,  for  in  a  very  early  stage  of  society  they 
will  be  largely  overcome.  Analyzed,  the  diffi- 
culty may  be  expressed  as  a  lack  of  something 
that  everybody  wants  all  the  time;  which  does 
not  rapidly  waste  or  deteriorate,  and  which  is 
divisible  without  loss,  so  that  it  may  be  given  in 
exchange  for  a  trivial  or  an  important  thing. 

Articles  for  decoration  of  the  person  have 
been  used  for  the  purpose,  but  for  more  con- 
venient illustration,  even  at  the  risk  of  historic 
inaccuracy,  let  us  assume  a  primitive  society, 
in  which  wheat  constitutes  a  large  part  of  the 


THE  PEACEFUL  SOLUTION      19 

food  and  in  which  there  is  considerable  division 
of  labor.  In  such  a  society  it  would  not  be  long 
before  wheat  became  the  medium  of  exchange 
if  nothing  better  were  found.  As  everybody 
would  want  it  all  the  time,  and  as  it  is  minutely 
divisible  without  loss,  and  does  not  rapidly 
waste,  it  could  be  used  for  the  purchase  of  a 
horse  or  a  darning  needle  with  equal  conven- 
ience. 

Yet  it  would  not  be  wholly  convenient,  for  a 
housewife  who  went  to  the  grocery  for  a  pound 
of  coffee,  some  sugar  and  spices  would  need  a 
two-bushel  bag  for  a  purse,  and  a  cart  to  carry 
her  money,  though  she  could  take  her  purchases 
home  under  her  arm.  However,  this  difficulty 
would  soon  be  overcome,  for  the  general  store 
man  (the  forerunner  of  the  department  store 
keeper)  would  find  that  his  cash  drawer  must 
be  larger  than  his  store.  He  would  therefore 
build  a  warehouse  and  issue  receipts  in  conven- 
ient denominations  for  use  at  his  store.  Then 
the  community  would  have  a  very  good  money, 
with  their  great  staple  as  its  basis. 

But  among  many  such  communities  some 
merchant  would  sooner  or  later  give  out  wheat 
from  his  warehouse  without  canceling  the  equiv- 
alent receipts,  by  mistake  or  perhaps  fraudu- 
lently. Then  the  communities,  if  they  were 
wise,  would  take  over  the  business  of  issuing 
money  on  wheat.  They  might  decide  to  estab- 


20  NATURAL  MONEY 

lish  mills  for  grinding  the  wheat  into  flour,  and 
might  even  issue  wheat  certificates  on  corn,  rye, 
barley  and  oats,  received  at  the  market  price 
and  sold  at  the  market  price. 

If  the  communities  did  this  they  would  have 
a  better  money  than  any  great  nation  of  the 
world  has  or  ever  had.  It  would  not  collapse 
periodically,  and  its  value  would  not  go  in  the 
opposite  direction  from  all  other  values  at  times, 
but  it  would  not  be  a  perfect  money,  as  we  shall 
see. 

Instead  of  considering  the  defects  of  present 
systems  of  money  and  seeking  to  devise  a  cure 
for  them,  I  shall  describe  what  I  consider  the 
natural  money,  sure  that  when  it  is  understood 
no  one  will  find  any  difficulty  in  comprehending 
all  the  phenomena  growing  out  of  the  use  of 
artificial  and  imperfect  systems. 

For  our  purpose  we  will  assume  an  isolated 
community  of  a  thousand  men  and  their  fam- 
ilies; not  primitive  men,  but  sturdy  men  who 
have  lived  in  civilization  and  are  accustomed  to 
the  habits  and  conditions  to  be  found  half  a  cen- 
tury ago  in  the  middle  states.  The  Mormons 
at  Salt  Lake  were  splendidly  situated  for  the 
development  of  a  perfect  money  system,  but  the 
dominance  of  their  religion  would  probably  have 
prevented  it  even  if  it  otherwise  might  have 
resulted. 

We  will  assume  that  our  colonists  brought 


THE  PEACEFUL  SOLUTION      21 

with  them  a  limited  amount  of  gold  and  silver, 
and  that  they  have  no  thought  of  inventing  or 
adopting  any  other  than  the  coin  system  with 
which  they  have  been  familiar,  but  they  do  in- 
tend to  build  a  substantial  community,  and 
desire  to  have  an  orderly  and  efficient  govern- 
ment, with  the  largest  measure  of  public  benefits 
and  of  personal  freedom. 

Let  us  assume  that  they  arrive  in  a  body  in 
the  early  spring,  and  that  for  the  time  being  they 
decide  that  all  work  shall  be  communal.  They 
must  have  enough  houses  for  protection  before 
the  coming  winter  and  must  grow  food  and 
provender,  so  they  decide  that  those  who  are 
handy  with  the  broad-ax,  saw  and  hammer  shall 
assist  the  few  artisans  in  the  building  of  houses, 
while  the  other  men,  with  the  assistance  of  some 
of  the  women  and  the  youths,  shall  grow  the 
crops.  But  it  is  understood  that  when  there  are 
houses  for  all  the  work  is  to  be  individualistic, 
except  for  such  work  as  is  of  a  public  character. 

When  they  have  reached  the  point  of  individ- 
ual work  they  hold  a  meeting  and  decide  that 
each  man  of  voting  age  shall  render  thirty  days' 
public  service  yearly  or  pay  the  equivalent  into 
the  public  treasury,  and  shall  be  subject  to  call 
for  from  one  to  thirty  days  additional. 

Even  without  any  difference  in  the  efficiency 
of  individuals  this  would  have  resulted  in  sub- 
stitute work  in  the  public  service  because  it 


22  NATURAL  MONEY 

would  enable  individuals  to  dispose  their  time 
more  conveniently;  with  difference  in  efficiency, 
this  substitute  work  was  all  the  more  certain  to 
prevail  because  it  enabled  the  more  efficient  to 
apply  their  labor  in  the  most  productive  way 
open  and  hire  less  productive  substitutes.  Thus 
the  pay  current  for  substitutes  established  a 
minimum  common  labor  wage. 

In  the  beginning  a  man  who  desired  a  sub- 
stitute made  arrangements  with  him  and  noti- 
fied the  overseer  of  public  works,  giving  the 
name  of  his  substitute.  The  overseer  gave  the 
receipts  accordingly  to  the  workman,  who  deliv- 
ered them  to  his  employer  and  received  his  pay; 
but  after  a  time,  probably  to  save  work  in  mak- 
ing the  receipts,  they  used  printed  blanks  re- 
quiring only  the  filling  in  of  the  worker's  name 
and  the  overseer's  stamped  signature.  These 
each  worker  delivered  to  his  employers. 

Still  later  even  this  was  found  to  be  unneces- 
sary, for  it  involved  personal  engagements  to 
perform  the  service  and  subsequent  settlements 
of  each  worker  with  his  employers.  Perhaps 
by  the  accident  of  some  workman's  failure  to 
settle  with  his  employers  at  the  usual  time;  pos- 
sibly by  the  natural  and  necessary  development 
of  the  situation,  the  workmen  came  to  be  quite 
indifferent  and  careless  as  to  settlements  and 
used  the  receipts  with  the  grocer,  the  butcher,  the 
merchant,  in  fact  everywhere  they  had  dealings. 


THE  PEACEFUL  SOLUTION      23 

But  most  of  the  receipts  were  for  a  week's 
work,  only  a  few  of  them  being  for  a  less 
amount,  so,  after  a  time,  on  the  suggestion  of  a 
committee  of  the  workmen,  the  receipts,  or  cer- 
tificates, as  they  were  commonly  called,  were 
given  in  various  denominations,  from  the  fourth 
part  of  a  day  to  one,  two,  two-and-a-half  and 
five-day  certificates,  and  were  printed  on  their 
best  paper  and  as  ornamentally  as  their  facili- 
ties allowed. 

Very  soon  after  this  was  done  the  certificates 
constituted  the  larger  part  of  the  circulating 
medium  and  the  people  realized  that  unwittingly 
they  had  invented  a  new  money.  Gradually,  as 
the  volume  of  the  certificates  increased,  the  gold 
disappeared  from  circulation  and  silver  was 
used  only  as  fractional  currency.  Coin  did  not 
disappear  by  "emigration"  nor  by  hoarding, 
but  by  finding  its  way  into  the  public  treasury 
and  remaining  there  because  the  people  pre- 
ferred the  certificates. 

Let  it  be  noted  that  these  certificates  were  not 
"promises  to  pay,"  nor  were  they  money  in  any 
legal  sense ;  not  legal  tender,  yet  they  performed 
all  the  functions  of  money.  Probably  no  one 
of  the  colonists  ever  so  much  as  thought  of  pro- 
viding by  ordinance  that  anything  should  be  a 
legal  tender. 


Ill 
THE  QUESTION  OF  REGULATION 


winter  evening  at  a  public  meeting  for 
the  consideration  of  certain  public  improve- 
ments, one  of  which  was  of  considerable  magni- 
tude, some  doubt  was  expressed  as  to  whether 
the  community  could  afford  it.  The  work  in 
question  involved  the  purchase  from  abroad  of 
about  fifteen  thousand  dollars'  worth  of  appli- 
ances, and  after  considerable  discussion  the  man 
who  acted  as  public  accountant,  recorder,  treas- 
urer, etc.,  said  he  had  a  suggestion  to  make,  and 
proceeded  about  as  follows: 

"There  is  something  more  than  $10,000  of 
coin  in  the  vault,  some  of  which  has  been  there 
over  a  year.  Gold  and  silver  keep  dribbling  in 
as  people  pay  their  taxes,  and  coin  never  goes 
out  except  that  occasionally  I  am  called  upon 
for  fractional  silver,  nickels  and  pennies,  and 
of  course  I  use  some  in  the  payment  of  small 
bills.  For  a  time  we  paid  some  of  the  workmen 
in  coin,  but  they  preferred  the  certificates,  so  we 
abandoned  coin  payments.  I  have  noticed  that 
many  persons,  in  paying  taxes,  pay  all  or  part 
in  coin  and  retain  certificates.  It  is  probable 
there  is  still  considerable  coin  in  the  possession 
of  individuals  who  would  gladly  exchange  it  for 

24 


THE  PEACEFUL  SOLUTION      25 

certificates  if  the  opportunity  offered.  I  sug- 
gest, therefore,  that  authority  be  given  for  mak- 
ing the  exchange,  and  that  all  the  coin  except 
the  fractional  silver,  nickels  and  pennies  be  used 
to  purchase  the  machinery  and  appliances 
needed  from  abroad  for  our  improvements." 

Hitherto  nobody  had  evinced  any  concern 
about  the  value  of  the  certificates.  They  had 
passed  current  on  the  same  basis  as  coin  (a  full 
day  certificate  as  $2.00)  and  nobody  thought 
of  any  other  basis;  but  now  that  the  suggestion 
was  made  to  send  the  coin  away  and  depend 
wholly  on  the  certificates  it  was  a  very  different 
thing,  and  the  discussion  showed  not  only  a  deep 
interest  but  widely  variant  opinions.  Some 
thought  that  every  currency  should  have  a  coin 
basis,  and  the  banker  thought  that  the  coin  in 
the  community  had  really  served  as  a  basis  for 
the  certificates,  which  passed  as  token  money 
upon  the  tacit  understanding  of  a  return  to 
coin  at  any  time  the  certificates  might  prove  un- 
satisfactory. He  was  very  sure  a  crisis  would 
come  before  long  if  the  coin  were  sent  away. 
He  raised  the  question  of  limiting  the  issue  of 
certificates,  and  soon  it  was  evident  that  this  was 
the  crux  of  the  whole  question.  How  to  limit 
them  had  never  been  considered,  and  now  it  was 
evident  that  this  was  the  one  point  to  be  made 
sure  of — if  it  could  be.  The  suggestion  that  this 
be  left  to  the  governing  board  seemed  to  meet 


26  NATURAL  MONEY 

with  general  approval,  and  would  doubtless  have 
carried  if  it  had  been  put  to  a  vote,*  but  a 
wheelwright  who  had  not  taken  part  in  the  dis- 
cussion before,  showed  conclusively  by  the  Soc- 
ratic  method  that  the  board  had  not  even  an 
approximate  idea  of  how  much  money  per 
capita  there  should  be.  Then  he  confessed  that 
he  had  no  idea,  and  expressed  his  belief  that  all 
the  people  together  knew  no  more  about  it  than 
he  did,  and  that  no  expert  could  be  imported 
who  could  give  them  any  light  on  the  subject. 

It  began  to  look  as  if  the  suggestion  would 
have  to  be  abandoned,  but  the  speaker  con- 
tinued: None  of  us  knows,  nor  all  of  us  to- 
gether, and  we  cannot  figure  it  out.  Even  if 
we  could,  it  would  be  dangerous,  for  an  unwise 
board  in  the  future  might  precipitate  disaster. 
This  possibility  is  a  fatal  defect  because  it  is  a 
perpetual  menace,  a  sword  of  Damocles.  Its 
effect  is  independent  of  its  occurrence.  Must 
our  plan  therefore  be  abandoned?  No;  for 
though  we  do  not  know  to  what  total  to  limit 
them,  and  though  no  fixed  total,  nor  even  a 
fixed  per  capita,  would  serve,  we  do  know  how 
to  limit  them  so  that  the  total  shall  always  be 


*There  is  a  widespread  superstition  that  if  several  men  who  "do 
not  know"  are  organized  into  a  board  they  will  bring  forth  wis- 
dom. In  many  (if  not  most)  cases  it  would  be  as  well  to 
appoint  a  committee  of  wooden  Indians,  for  ignorance  does  not 
become  wisdom  by  multiplication. 


THE  PEACEFUL  SOLUTION      27 

right,  for  it  will  be  self -regulating.  It  is  a 
curious  fact  that  we  look  upon  the  efforts  of 
governments  in  times  past  to  regulate  prices  and 
wages  as  a  superstition  in  sociology;  even  look 
upon  the  direct  attempt  to  regulate  the  value 
of  money,  in  the  same  way;  yet  do  not  realize 
that  attempt  to  regulate  its  volume  is  the  same 
thing  in  disguise.  Perhaps  I  should  not  call  it 
superstition.  Where  the  effort  has  been  to 
legislate  value  into  light-weight  coins,  it  has 
properly  been  stigmatized  as  downright  legisla- 
tive fraud,  but  when  the  same  end  is  sought  by 
indirection  it  is  attributed  rather  to  ignorance 
than  to  dishonesty,  unless  the  result  be  obviously 
inequitable.  My  contention  is  that  any  exercise 
of  official  power  to  expand  or  contract  the  vol- 
ume of  money  is  of  a  piece  with  light-weight 
issues,  repudiation,  and  confiscation. 

Nobody  knows  nor  can  know  by  a  process 
of  reasoning,  what  is  the  value  of  a  bushel  of 
wheat,  corn,  oats,  or  anything  else,  but  the 
market  knows;  the  relation  of  supply  and  de- 
mand fixes  prices  in  a  free  market,  and  it  will 
do  the  same  for  our  certificates  if  wq  abandon 
all  effort  to  regulate  their  quantity.  _It  is  for 
us  to  inaugurate  the  system,  set  the  machinery 
going,  and  then  keep  hands  off. 

Men  always  invest  their  gods  with  unknow- 
able attributes,  and  it  may  be  from  this  pro- 
pensity that  money  has  been  considered  a  thing 


28  NATURAL  MONEY 

of  mystery.     There  is  no  mystery,  but  much 
mystification. 

Let  us  suppose  that  gold,  like  aluminum, 
were  to  be  found  everywhere,  and  that  every- 
one had  a  right  to  extract  it  from  the  ground; 
that  by  ordinary  work  a  man  could  extract  in 
a  day  as  much  gold  as  is  contained  in  two  gold 
dollars;  that  the  process  required  only  a  shovel 
and  a  pan  and  were  such  that  no  modification 
could  be  made.  This  would  relieve  men  lacking 
employment,  but  wages  would  constantly  fall, 
because  gold  is  a  long-lived  substance  even  when 
actually  in  circulation,  and  becomes  almost  im- 
mortal when  it  lies  in  a  vault  and  shifts  the  real 
work  to  a  paper  substitute.  Thus  every  dollar 
that  issues  is  a  permanent  addition  to  the  stock, 
except  as  money  is  melted  for  use  in  the  arts, 
and  this  cannot  happen  to  any  considerable  ex- 
tent except  as  a  result  of  decline  in  value.  As 
the  volume  would  be  increasing  the  value  would 
decline  pro  tanto,  assuming  other  things  the 
same,  until  a  dollar  would  be  reduced  to  a  very 
low  point  measured  in  the  things  it  would  buy. 
What  I  particularly  desire  to  illustrate  is  the 
incurable  defect  of  precious  metal  moneys.  The 
dollars  come  in,  but  will  not  get  out  to  stay 
except  as  their  value  is  permanently  lowered. 

A  perfect  currency  is  not  only  elastic  in  the 
sense  that  it  will  expand  to  the  fullest  require- 
ments of  trade,  but  it  is  as  perfect  in  resiliency, 


THE  PEACEFUL  SOLUTION      29 

for  no  matter  to  what  extent  it  has  been  ex- 
panded by  temporary  demand,  it  will  contract 
as  demand  abates. 

But  all  this  change  must  be  automatic,  and 
not  by  the  dictum  of  any  man  or  any  number  of 
men;  not  even  by  the  unanimous  vote  of  all 
concerned. 

The  only  perfectly  performed  functions  of 
the  body  are  the  involuntary  or  automatic  ones, 
and  I  suspect  the  same  is  true  in  the  social  body. 
We  could  not  all  come  together  and  by  estimate 
set  a  proper  price  upon  a  single  staple,  even  if 
we  knew  the  exact  quantity  in  stock  and  had 
all  the  statistics  of  past  years  to  aid  us,  yet  we 
do  it  without  effort  and  unconsciously;  do  it 
perfectly.  Natural  law  takes  care  of  it,  and  all 
effort  to  regulate  it  would  be  labor  lost,  and 
would  bring  only  confusion  and  disaster  if  we 
were  so  unwise  as  to  attempt  it.  Every  loaf  of 
bread  consumed,  every  cooky  eaten  by  a  little 
one,  is  a  factor  in  the  price  of  wheat.  It  is 
through  the  operation  of  her  laws  that  nature 
admonishes  us  by  ascending  prices  against  im- 
providence; by  descending  prices  intimates  in- 
dulgence in  her  bounty. 

But  how  shall  we  arrange  so  to  regulate  the 
quantity  of  our  money  that  its  value  shall  re- 
main constant?  Remember  that  the  quantity 
must  increase  when  the  demand  increases  and 
decrease  when  the  demand  decreases.  This  is 


30  NATURAL  MONEY 

exactly  the  opposite  of  the  behavior  of  coin 
moneys,  and  of  all  moneys  heretofore  in  use. 
How  shall  it  be  accomplished? 

Easy  enough.    Easier  to  do  than  not  to  do. 

It  is  said  that  the  first  steam  engines  re- 
quired a  person  to  move  the  valve  back  and 
forth  to  let  the  steam  into  the  cylinders,  a  small 
boy  usually  performing  this  work.  One  of  these 
boys  discovered  that  he  could  attach  the  valve 
stem  to  the  moving  machinery  and  thus  gain 
freedom  from  the  monotonous  task.  From  the 
ingenuity  of  this  boy,  step  by  step  we  have  come 
to  the  automatic  cut-off,  a  practically  perfect 
device  for  maintaining  constancy  of  speed,  but 
the  great  heart  of  commerce,  the  pumping  en- 
gine that  circulates  the  blood  through  the  eco- 
nomic body,  still  has  a  small  boy  actuating  the 
most  delicate  and  vital  part  of  the  mechanism, 
and  the  fluttering  of  the  heart  tells  us  how  in- 
adequately he  performs  his  work.  We  must 
attach  the  governor  to  the  mechanism  in  such 
way  that  variations  shall  bring  about  their  own 
correction. 

Hitherto  we  have  been  requiring  from  each 
male  citizen  of  voting  age  thirty  to  sixty  days 
of  public  service  each  year,  for  which  receipts 
have  been  given.  These  receipts  were  not  pay- 
ment for  service  but  acknowledgments  of  ser- 
vice due  and  rendered.  This  little  government 
does  not  pay  for  anything.  It  receives  what  is 


THE  PEACEFUL  SOLUTION      31 

due  it  and  gives  receipts.  These  receipts  pass 
current  because,  being  impersonal,  anyone  who 
is  prepared  to  surrender  them  to  the  amount  of 
his  services  due  is  thereby  discharged  of  his  ob- 
ligation; shows  that  he  has  rendered  the  service 
personally  or  by  proxy.  By  surrendering  them 
he  designates  for  credit  to  his  own  account  that 
part  of  public  service  for  which  the  certificates 
were  issued;  and  the  certificates  go  back  to  be 
canceled  or  to  be  reissued  in  acknowledgment  of 
further  service. 

But  heretofore  we  have  done  only  such  pub- 
lic work  as  estimates  called  for  without  any 
reference  to  creating  a  circulating  medium,  and 
if  this  has  given  us  the  proper  amount  to  use 
as  money  it  is  simply  a  happy  accident. 

There  is  one  way  and  only  one  way  to  de- 
termine how  much  public  work  should  be  done, 
and  that  is  to  provide  public  employment  for  all 
who  cannot  be  more  profitably  engaged  in  pri- 
vate employment. 

Naturally  you  will  ask  how  this  can  be  done. 
It  is  very  simple,  as  most  great  truths  are.  All 
the  change  we  need  to  make  in  our  present 
method  is  an  ordinance  authorizing  and  com- 
manding the  board  of  public  works  to  employ 
all  unskilled  laborers  who  apply,  at  two  cer- 
tificates per  day  (as  we  have  been  giving),  and 
as  many  skilled  laborers  as  may  be  needed,  at 
such  compensation  as  is  necessary  to  secure  the 
number  required. 


32  NATURAL  MONEY 

While  I  do  not  think  it  important,  it  may  be 
well  for  technical  reasons  to  provide  in  the  or- 
dinance that  the  certificates  shall  be  legal  tender. 

The  way  in  which  this  plan  will  work  to  ac- 
complish what  we  seek  is  this:  If  at  any  time, 
for  any  reason  whatsoever,  there  are  not  enough 
certificates  in  circulation  to  meet  the  demands 
of  trade,  their  value  will  rise  slightly,  or  what 
is  the  same  in  effect,  general  values,  prices,  will 
fall,  including  the  price  of  labor  in  private  em- 
ployment. This  will  cause  an  increase  in  the 
number  of  public  workers  and  a  consequent  ex- 
pansion of  the  currency.  Instead  of  saying  that 
prices  would  fall  I  think  it  better  to  say  that 
trade  would  slacken,  for  it  is  not  likely  that 
prices  would  noticeably  change  nor  that  private 
wages  in  general  would  fall.  Instead,  it  would 
probably  be  only  a  change  from  brisk  to  quiet, 
and  laborers  whose  work  in  private  employment 
is  intermittent  or  irregular  would  find  less  call 
from  private  employers  and  as  a  result  would 
spend  more  time  in  public  work.  If  some  men 
in  private  employment  were  laid  off  temporarily 
they  would  shift  to  public  work  until  the  de- 
ficiency of  certificates  was  made  good  and  busi- 
ness became  brisk  again. 

In  a  large  community,  one  of  many  millions, 
my  opinion  is  there  would  be  no  noticeable  shift- 
ing from  public  to  private  work  and  back  again, 
except  of  those  laborers  who  habitually  do  so  be- 


THE  PEACEFUL  SOLUTION      33 

cause  of  the  character  of  their  private  employ- 
ment. Indeed  we  may  find  that  except  for  those 
intermittent  workers  there  will  be  no  shifting. 
I  suspect  the  ultimate  development  will  be  that 
most  young  men  will  serve  an  apprenticeship  in 
public  work,  and  the  currency  volume  will  be 
adjusted  by  the  slightly  varying  average  time 
they  remain.  This  apprenticeship  work,  if  it  all 
goes  into  the  public  service  temporarily,  should 
be  a  very  accurate  gauge  or  index  of  the  cur- 
rency, for  if  we  can  imagine  a  perfectly  even 
standard  of  business,  that  is,  unvarying  pros- 
perity, the  demand  for  money  should  be  in  pro- 
portion to  the  number  of  producers,  and  the  ap- 
prentices are  the  enlisting  force  in  the  industrial 
army. 

On  the  other  hand,  if  there  should  ever  be  too 
many  certificates  in  circulation  their  value  would 
fall  slightly,  or  business  would  become  more 
brisk  at  prevailing  prices  and  workers  would  be 
drawn  from  public  to  private  employment  (not 
many  but  a  few)  and  cancellation  by  payment 
of  taxes  would  bring  about  adjustment. 

Probably  more  certificates  will  issue  each  year 
than  are  canceled,  for  the  community  is  growing 
and  naturally  will  need  more  money  and  more 
public  service.  Indeed  I  suspect  that  every 
child,  soon  after  its  birth,  if  not  before  its  birth, 
will  be  represented  by  an  increase  of  the  cur- 
rency, and  every  increment  of  social  energy  will 
be  so  expressed  in  its  proper  degree. 


34  NATURAL  MONEY 

As  compared  with  getting  money  by  digging 
the  precious  metals  from  the  earth,  even  if  they 
were  everywhere  at  hand,  this  method  is  immeas- 
urably superior,  for  it  will  give  us  a  better 
money  and  we  shall  have  the  public  works  be- 
sides. This  will  not  mean  that  the  public  ser- 
vice and  public  utilities  cost  us  nothing,  but  that 
our  money,  thq  instrument  of  exchange,  costs  us 
nothing;  not  even  the  trivial  cost  of  the  certifi- 
cates, for  they  or  some  equivalent  would  have 
to  issue  even  if  they  were  not  used  as  money. 
And  as  money  is  merely  a  short  method  of  book- 
keeping, why  should  the  counters  cost  anything? 

So  they  did  it. 


ECONOMIC  EMANCIPATION, 

\ltTE  have  seen  from  the  foregoing  that  the 
~  *  money  of  the  proposed  system  is  self- 
regulating  in  quantity;  that  when  its  value  rises 
the  quantity  is  automatically  increased,  and 
when  the  value  falls  the  quantity  is  automatic- 
ally decreased,  which  is  as  it  should  be;  and  if 
we  can  show  that  this  kind  of  money  is  the  nat- 
ural money  we  shall  have  established  its  sclaim 
to  adoption. 

Economically,  human  evolution  consists  in 
gradual  self -emancipation  from  thq  necessity  to 
toil.  This  necessity  is  imposed  by  nature,  and 
it  is  evident  that  complete  emancipation  is  the 
work  of  ages,  each  generation  winning  a  little 
more  "free  time."  Let  us  get  this  fundamental 
truth  firmly  fixed  in  mind,  for  it  is  very  im- 
portant. Every  economic  advance  means  that 
less  toil  is  necessary  to  maintain  our  mode  of 
life,  or  that  we  may  live  considerably  better  with 
the  same  amount  of  toil,  or  somewhat  better 
with  a  little  less  toil.  To  reduce  it  to  definite 
terms,  assuming  that  we  now  toil  eight  hours  a 
day,  if  improved  methods  enable  us  to  produce 
as  much  in  seven  hours  as  we  now  produce  in 
eight,  we  will  work,  say,  seven  and  a  half  hours 

35 


36  NATURAL  MONEY 

and  live  somewhat  better.  Even  with  the  better 
living  we  shall  then  have  half  an  hour  more  of 
"free  time,"  but  it  will  not  be  for  use  without 
accounting  to  Mother  Nature.  Economically  it 
is  "free  time,"  but  it  has  an  evolutional  aspect 
also,  and  in  this  sense  is  probational,  and  if  it 
be  devoted  to  indulgence  instead  of  aspiration 
we  shall  find  our  gain  has  become  a  loss.  He 
has  made  an  ill  exchange  of  masters  who  has 
won  freedom  from  "necessity"  to  become  the 
slave  of  passions  and  appetites  or  of  vanity  and 
vulgar  display.  Unhappily  we  have  evidence 
all  about  us  that  some  individuals  are  rapidly 
losing  the  freedom  so  slowly  won. 

But  as  a  whole,  humanity  is  progressing,  and 
we  will  consider  the  progress  of  a  society  in  which 
the  advance  is  not  lost,  wherefore 

Let  us  now  suppose  our  colony  to  own  every- 
thing in  common  except  such  things  as  must, 
for  convenience,  be  owned  individually.  We 
will  make  a  supposititious  schedule  of  this  col- 
ony's labor  for  a  few  years,  and  seq  if  we  can 
get  any  helpful  suggestion  from  it.  We  will 
assume  that  in  the  beginning  all  their  work  is 
necessary  to  make  sure  of  subsistence  and  to  con- 
duct the  simplest  form  of  government,  and  in- 
dicate their  progress  during  a  period  of  ten 
years  by  the  percentage  of  labor  set  free  from 
necessity  to  toil  to  maintain  the  first  year 
standard. 


THE  PEACEFUL  SOLUTION       37 


Labor  necessary  to  main-      Percentage  of 
tain   first-year  standard.         "free  labor." 


1st  year 100%  None 

2nd  year 90%  10% 

3rd  year 80%  20% 

4th  year....  75%  25% 

5th  year 70%  30% 

6th  year 65%  35% 

7th  year 62%  38% 

8th  year 60%  40% 

9th  year 58%  42% 

10th  year....  56%  44% 


Here  we  have  an  annually  increasing  amount 
of  labor  set  free  from  absolute  necessity,  and  its 
disposal  will  determine  the  progress  of  the  col- 
ony. In  the  beginning  a  very  large  percentage 
of  it  will  be  devoted  to  a  better  material  stand- 
ard of  food,  clothing,  etc.,  but  very  soon  a 
goodly  percentage  will  go  to  permanejnt  im- 
provements and  to  social  and  moral  benefits. 
Let  us  take  the  annual  percentages  of  "free 
labor"  and  make  an  imaginary  apportionment 
of  them  to  various  lines  of  activity,  not  dividing 
them  minutely  but  in  broad  classifications. 

This  schedule  (see  page  38)  indicates  that  in 
the  second  year  six  of  the  ten  points  gained 
went  to  a  better  subsistence,  three  to  improve- 
ments of  a  more  permanent  character  but  for 
individual  use,  and  only  one  to  communal  bene- 
fits, but  the  increase  for  food  and  clothing 
reaches  its  limit  in  a  few  years,  and  the  sixth 


38  NATURAL  MONEY 

year  from  the  first  of  "free  labor,"  the  amount 
devoted  to  personal  and  family  betterments 
shows  a  decrease,  while  the  communal  benefits 
are  steadily  commanding  a  larger  share,  reach- 
ing twenty-four  out  of  forty-four  in  the  last 
year. 

«4    I    O  I    t,    .-  fc    •  I    fc,    I    fc     -  *    i  d    1 

°*~        slip      5i^s       HI** 

V  5  **  fi  **       <a~    '  P.  ^  ? 

ff*l  Ss'of  IslfSl  |.||| 

Pi      K-h     l*n=i      MI 

£ral               fif^lS  fifftUl  fi?S£S 

10%          6  3  1 

20%         12  6  2 

13  9  3 

14,  12  4 

35%          15  12  8 

38%          15  10  13 

40%          15  8  17 

42%          15  6  21 

44%          15  5  24 

As  this  society  is  a  communistic  one,  it  is  a 
matter  of  course  that  the  24  per  cent,  of  the 
people  who  are  doing  the  community  work 
share  equally  with  those  who  are  producing  the 
food,  clothing  and  innumerable  other  things  that 
must  be  divided  and  consumed  individually. 

Suppose  now  they  decide  to  become  individ- 
ualistic and  to  continue  those  in  the  public  em- 
ployment who  have  been  so  engaged  the  current 
year  and  pay  them  in  conveniently  subdivided 


THE  PEACEFUL;  SOLUTION    39 

certificates,  levying  a  general  tax  equal  to  the 
certificates  issued,  and  payable  in  certificates. 

These  certificates  will  be  the  public  workers' 
title  deeds  to  their  share  of  all  the  utilities 
(goods  and  service  of  all  kinds)  that  administer 
to  life.  There  is  no  law  compelling  people  to 
exchange  goods  or  service  for  them,  but  the  tax 
law  compels  each  person  to  surrender  his  pro- 
portion of  the  certificates  in  payment  of  his 
taxes,  and  if  he  must  surrender  them  he  must 
get  them.  The  only  way  he  can  get  them  is  to 
give  goods  or  service  in  exchange  for  them. 

They  will  therefore  be  the  money  of  the 
colony. 

This  money  is  the  natural  money  because  it 
is  a  natural  and  obvious  use,  in  a  very  important 
function,  of  that  which  must  issue  whether  it 
be  so  used  or  not — receipts  for  public  service 
rendered. 

It  is  a  natural  money  because  it  makes  each 
man's  community  service  (rendered  personally 
or  by  substitute)  the  means  of  measuring  and 
the  instrument  for  exchanging  the  products  of 
his  privately;  applied  industry. 

It  is  the  natural  money  because  society  is 
cooperation;  division  of  labor  is  economic  coop- 
eration and  frees  labor  from  necessity  to  toil  for 
subsistence,  sending  it  to  community  (govern- 
ment) service,  and  it  is  division  of  labor  that 
makes  exchanges  of  products  necessary. 


40  NATURAL  MONEY 

Can  anything  be  conceived  more  fitting  than 
that  these  public  service  certificates  of  "title  to 
share"  with  those  who  applied  their  labor  pri- 
vately, should  be  the  orders  upon  the  surrender 
of  which  the  shares  should  be  delivered? 

Can  anything  more  fitting  and  admirable  be 
conceived  than  that  a  seemingly  trivial  incident 
(the  receipts)  arising  from  one  of  the  two  great 
benefits  (public  works)  of  the  division  of  labor, 
should  be  the  agency  of  accomplishing  what  the 
division  of  labor  has  made  necessary  in  the  other 
great  class  of  benefits  (exchanges  of  private 
production)  and  without  which  those  benefits 
cannot  be  realized? 

Can  anything  be  more  fitting  than  that  the 
portion  of  each  man's  total  service  which  he  de- 
votes to  public  good;  which  is  in  its  nature 
higher,  almost  altruistic,  should  furnish  the 
standard  for  measuring  and  exchanging  the 
product  of  his  egoistic  labor? 

It  is  the  natural  money  also  because  it  en- 
ables every  community  to  be  economically  com- 
plete- and  self-contained  so  far  as  its  money 
system  is  concerned;  that  is,  no  country  need 
send  abroad  for  money  material. 

It  is  the  natural  money  because  its  quantity, 
and  therefore  its  value,  is  regulated  absolutely 
by  the  demands  of  trade,  and  is  not  affected  by 
any  other  influence.  This  is  all-important  and 
be  further  considered. 


THE  PEACEFUL  SOLUTION      41 

It  is  the  natural  money  also  because  the  sys- 
tem automatically  attracts  all  "free  labor"  to  its 
proper  field  of  activity,  work  for  the  public 
good. 


JUSTICE  AND  MORALITY  OF  THE 
SYSTEM 

T  BELIEVE  I  have  shown  that  the  proposed 
•*•  money  is  natural  and  sound,  and  now  I  shall 
undertake  to  show  that  it  has  its  origin  in  justice 
and  morality. 

Both  in  Europe  and  America  socialism  has 
madq  millions  of  converts  during  the  past  half 
century,  and  many  persons  are  now  apprehen- 
sive that  it  is  going  to  prevail  in  the  near  fu- 
ture. It  is  my  belief  that  its  rapid  progress 
grows  out  of  the  hopelessness  of  present  sys- 
tems, and  that  there  are  no  definite  and  coher- 
ent ideas  as  to  the  socialistic  order,  should  it 
ever  he  established.  The  vast  armies  of  social- 
ism are  therefore  aggregations  of  protest;  a 
negative  force  rather  than  a  constructive  one. 

The  strength  of  all  such  opposition  move- 
ments is  the  almost  universal  recognition  of  the 
fact  that  something  is  radically  wrong;  not  a 
few  little  things,  but  one  or  many  big  things; 
so  big  and  so  wrong  that  to  the  mass  of  the 
people  life  is  a  dreary  grind  while  the  few  reap 
the  harvest  of  the  many. 

I  do  not  believe  in  socialism,  but  I  do  believe 
in  what  the  socialists  are  striving  to  bring  about 

42 


THE  PEACEFUL  SOLUTION       43 

• — an  ideal  condition  of  society.  I  believe  their 
plan  is  fatally  defective  because  it  is  premature. 
It  may  come  ultimately;  in  fact,  I  think  that 
socialism  or  its  equivalent  will  be  the  final  out- 
come, but  for  the  present  and  near  future,  pri- 
vate initiative  and  private  occupancy  of  land 
upon  secure  tenure  are  necessary  to  the  best 
interests  of  society.  I  do  not  endorse  our  pres- 
ent land  system,  nor  am  I  willing  to  supplant 
it  by  government  ownership  of  the  tools  of  pro- 
duction, the  government  to  become  the  employer 
of  the  people,  but  I  do  contend  that: 

The  government,  having  sold  the  land,  is 
morally  obligated  to  furnish  employment  upon 
public  works  at  a  living  wage  to  all  persons 
who  do  not  find  private  employment.  As  all 
that  we  have  comes  from  the  land,  and  as  all 
labor  must  be  applied  to  land  (natural  ob- 
jects), is  it  not  plain  that  those  who  lay  claim 
to  ownership  of  the  land  are  under  obligation 
to  relinquish  a  part  of  the  land  or  employ  at 
a  living  wage  those  who  have  no  land?  For- 
merly this  was  recognized,  for  the  yeomanry 
"went  with  the  land." 

This  moral  obligation  of  the  land  owner 
would  be  plain  if  the  government  had  sold  all 
the  land  to  one  or  a  few  men,  and  it  was  not 
denied  nor  evaded  in  feudal  times,  for  then 
the  relation  of  the  whole  people  to  the  land  was 
close  and  obvious;  but  when  the  modern  indus- 


44  NATURAL  MONEY 

trial  system  came  in  with  its  factories  and 
thousands  of  employes  in  a  mill,  the  relation  of 
these  workers  to  the  land  became  obscured. 

It  may  be  granted  that  the  government 
should  furnish  employment  to  all  who  are  in- 
voluntarily idle,  but  the  question  be  asked:  "On 
what  terms — at  what  wage?"  That  is  a  ques- 
tion no  man  can  answer,  nor  can  all  men  to- 
gether answer  it;  that  is,  they  cannot  tell  what 
the  real  wage  will  be;  what  it  will  amount  to 
in  the  things  people  use  and  which  constitute 
the  real  wages  of  labor.  But  fortunately,  with 
this  system  of  money;  making  the  wages  of 
laborers  the  money  of  the  realm,  we  do  not 
need  to  know.  The  natural  law  will  determine 
the  purchasing  power  of  the  money  wage.  I 
suggested  $2.00  because  that  is  not  far  from 
the  current  price  for  common  labor  in  good 
times,  but  except  for  our  habit  of  thought  it 
would  do  just  as  well  to  say  one  cent  or  ten 
dollars,  or  use  an  arbitrary  and  meaningless 
term.  In  fact  there  would  be  a  degree  of  pro- 
priety in  using  the  sign  of  the  unknown  quan- 
tity, os.  Whatever  is  given  for  a  day  of  com- 
mon labor,  in  all  places  and  at  all  times,  and 
cannot  be  obtained  except  by  giving  labor  or 
goods  for  it,  and  must  be  had  to  pay  taxes, 
will  buy  as  much  as  a  day  of  common  labor  can 
produce  for  the  laborer  in  private  employment. 
This  is  self-evident. 


THE  PEACEFUL  SOLUTION       45 

To  say  that  the  government  may  demand  the 
service  of  the  citizen  to  the  extent  of  its  need, 
but  that  he  may  not  demand  of  the  nation  opr 
portunity  to  render  service  (to  labor)  to  the 
extent  of  his  need,  is  to  make  a  mockery  of  gov- 
ernment and  to  degrade  the  sentiment  of  loy- 
alty from  a  lofty  devotion  to  a  base  servility. 

The  proposed  money  is  therefore  not  only 
the  natural  money,  but  it  is  the  only  money 
founded  in  morality;  is  in  effect  an  expression 
of  the  reciprocal  relations  subsisting  between 
all  the  individuals  as  government  and  each  of 
the  individuals  as  a  citizen. 

Not  only  is  it  the  natural  and  the  moral  mon- 
ey for  the  foregoing  reasons,  but  it  is  also  natural 
and  moral  because  it  issues  with  the  tacit  con- 
sent and  approval  of  all  the  people,  for  when  a 
laborer  by  public  service  causes  its  issue  he  does 
so  because  no  one  of  all  the  millions  offers  him 
sendee  at  better  compensation;  and  if  any  citi- 
zen think  too  much  public  work  is  being  done 
he  is  at  liberty  to  take  as  many  persons  out  of 
public  work  as  he  pleases  or  can,  and  each  of 
all  the  citizens  is  estopped  to  complain  that  the 
government  employs  workers  so  long  as  he  does 
nothing  to  take  them  out  of  public  employment. 

To  make  the  matter  concrete  and  personal, 
suppose  an  objector  to  say  to  a  public  works 
official : 


46  NATURAL  MONEY 

Citizen — You  have  too  many  men  employed 
at  public  expense. 

Official — Do  you  think  so?  I  am  willing  you 
should  engage  as  many  of  them  as  you  require. 

Citizen — I  do  not  want  any,  but  there  are 
too  many  at  work  and  I  think  the  force  should 
be  cut  down. 

Official — You  are  a  merchant.  Some  of  these 
men  are  your  customers.  If  I  discharge  them 
they  cannot  buy  your  goods.  Not  only  that, 
but  being  in  enforced  idleness  they  would  soon 
lower  wages  in  all  the  employments  about  you 
and  thus  further  reduce  your  sales  by  reducing 
the  purchasing  power  of  others.  Would  that 
be  good  for  your  business? 

The  man  out  of  a  job  menaces  the  merchant 
as  well  as  other  workmen. 

To  say  that  too  much  public  work  is  being 
done  is  only  another  way  of  saying  that  too 
little  private  work  is  being  done,  or  by  implica- 
tion to  declare  that  some  men  should  be  in  en- 
forced idleness.  Is  it  conceivable  that  any 
man  who  is  sane  and  humane  would  make  such 
contention? 

Under  this  system  it  is  to  the  interest  of  the 
laboring  men  as  a  class  to  accept  private  rather 
than  public  employment,  for  so  long  as  they  can 
get  the  same  wages  from  private  employers  the 
purchasing  power  of  the  wages  will  be  greater. 
Every  addition  to  the  currency  beyond  the  re- 


THE  PEACEFUL  SOLUTION      47 

quirements  of  trade  reduces  the  purchasing 
power  of  the  unit,  but  no  addition  that  comes 
in  response  to  the  demands  of  trade  can  have 
this  effect,  because  it  is  the  increasing  purchas- 
ing power  of  the  unit  that  calls  forth  the  in- 
crease. 

It  is  the  natural  and  the  moral  system  of 
money  because  it  does  away  with  enforced  idle- 
ness and  the  incalculable  suffering,  the  vice  and 
the  crime  resulting  therefrom;  and  not  only 
will  it  put  an  end  to  enforced  idleness,  but  will 
end  the  voluntary  idleness  of  those  able-bodied 
idlers  who  prefer  beggary  and  imposture  to 
work,  and  are  able  to  live  in  that  way  because 
it  is  impossible  under  present  conditions  to  dis- 
tinguish them  from  those  who  are  idle  because 
they  cannot  secure  employment. 

The  objection  is  sure  to  be  urged  that  the 
government  should  never  spend  more  than  its 
income,  meaning  that  it  should  not  spend  more 
than  the  taxes  levied  for  the  year.  This  ap- 
pears to  be  a  sound  declaration  of  principle, 
but  it  is  not.  The  government's  real  income  is 
the  annual  value  of  the  ground.  This  can 
never  be  known  with  exactness.  Even  the  land 
owners  do  not  know,  and  very  frequently  find 
out  the  value  of  a  particular  parcel  at  consid- 
erable expense  and  great  risk.  To  say  that  the 
landlord  is  entitled  to  such  value  until  others 
find  it  out;  until  the  public  finds  it  out  and 


48  NATURAL  MONEY 

takes  it  over,  is  only  to  say  that  a  man  is  the 
owner  of  what  he  finds,  by  right  of  discovery, 
and  may  rightfully  use  it,  if  it  may  be  used 
without  damage,  until  it  is  claimed  by  one  hav- 
ing a  higher  title.  He  is  the  rightful  owner  by 
virtue  of  his  sagacity  and  his  willingness  to  take 
the  risk  of  proving  his  opinion. 

But  not  all  the  landlords  together  can  pre- 
vent the  index  from  appearing  in  the  form  of 
"free  labor,"  and  this  the  government  can  take 
without  cost  and  without  knowing  until  after- 
ward how  much  it  is.  All  that  is  necessary  is 
to  take  all  that  offers.  This  will  always  be  in 
excess  of  the  tax  levy  because  the  market  (in 
this  case  the  labor  market)  holds  or  frees  the 
energy  as  inerrantly  as  gravity  holds  the  con- 
tents of  the  balances  or  the  planets  in  their 
paths,  and  it  offers  to  the  people  the  product  of 
this  "free  labor"  for  their  common  use,  and  a 
perfect  agency  of  exchange  for  permanent  use. 

The  foregoing  is  a  clear  and  comprehensive 
outline  of  the  principles  of  the  proposed  sys- 
tem, and  it  is  now  in  order  to  treat  the  subject 
of  money  more  in  detail;  to  consider  the  char- 
acteristics of  a  perfect  currency,  the  defects  of 
the  systems  now  in  use,  or  that  have  been  re- 
cently advocated,  and  to  compare  the  proposed 
system  and  its  workings,  particularly  with  the 
coin  systems  now  in  general  use. 


yi 
QUALITIES  OF  A  PERFECT  MONEY 

AS  before  stated, the  primary  use  of  money  is 
•*•*•  as  an  agency  of  exchange,  and  for  this  pur- 
pose alone  almost  anything  that  is  convenient, 
easily  divisible  and  universally  desired,  will 
serve  fairly  well;  but  in  a  highly  complex  soci- 
ety there  are  other  uses  of  money  that  are  very 
important,  all  of  which  must  be  considered  in 
order  that  we  may  know  all  the  qualities  of  an 
ideal  money. 

As  obligations  extending  over  long  periods 
of  time  are  now  very  common,  such  as  long- 
time bonds,  life  insurance,  annuities,  leases  for 
long  terms,  etc.,  it  is  plain  that  money  should 
be  as  constant  a  measure  or  standard  of  value 
as  a  pound  is  of  weight  or  a  yard  is  of  length, 
if  it  is  possible  to  get  such  a  measure.  This  is 
so  obviously  desirable  that  it  needs  no  argu- 
ment. 

For  convenience  it  will  be  well  to  make  a  list 
of  the  qualities  of  the  ideal  money,  and  if  these 
qualities  are  kept  in  mind  it  will  be  easy  to  see 
where  the  money  systems  now  in  use  fall  short 
of  the  requirements. 

1.  The  ideal  money  must  be  accepted  in  ex- 
change without  question,  hesitation,  or  discount. 


50  NATURAL  MONEY 

2.  It  must  have  constancy  of  value,  which 
constancy  must  be  assured  for  all  time. 

3.  It  must  expand  and  contract  in  volume  in 
response  to  the  demands  of  trade  as  expressed 
through  the   operation  of   influences   that   are 
automatic  and  free  from  control  by  any  clique, 
class  or  combination — free  even  from  control  by 
the  government,  except  with  the  sanction  of  the 
people  at  large,  positively  and  specifically  ex- 
pressed, and  its  volume  must  not  be  affected  by 
any  other  influence  than  the  demands  of  trade. 

4.  It  must  cost  the  government  nothing. 

5.  It  must  cost  the  individual  its  face  value, 
and  must  not  be  procurable  except  in  exchange 
for  service  or  goods. 

6.  It  must  never  be  issued  except  by  the  gov- 
ernment in  voluntary  exchange  for  services  or 
goods,  thus  issuing  only  by  the  reciprocal  action 
of  the  people  as  a  whole  (the  government)  and 
the  people  as  individuals  acting  in  perfect  free- 
dom. 

7.  It  must  be  an  expression  of  government  or 
communal  activity;  a  representative  expression 
of  all  community  or  public  benefits,  with  great 
propriety  used  as  the  medium  of  exchange  and 
repository  of  value  for  future  use. 

8.  It  must  be  convenient,  easily  recognized, 
difficult  to  imitate,  and  be  infinitely  divisible 
without  loss  of  value. 


TO 

THE  COST  OF  COIN  MONEY 

TN"  all  lines  of  production  and  in  most  lines  of 
•*•  exchange  there  is  a  very  considerable  ex- 
pense for  replacement  of  the  tools  and  other 
agencies  used.  All  material  things  wear  out  or 
decay,  and  in  all  business  there  is  a  constant 
effort  to  reduce  the  cost  of  tools  and  appliances 
and  also  to  reduce  the  wear  and  disintegration. 
To  use  a  tool  that  is  more  expensive  than  nec- 
essary, or  one  that  wears  out  more  rapidly  than 
another  that  may  be  had,  or  one  less  efficient 
than  another  available  one,  is  voluntarily  to 
commit  waste. 

Money  is  the  greatest  of  all  labor-saving  in- 
struments— probably  greater  than  all  others  to- 
gether— and  being  in  most  universal  use,  it  is 
important  to  have  that  form  of  money  the  first 
cost  of  which  is  low,  the  wear  of  which  is  little 
or  none,  and  the  loss  or  destruction  of  which, 
though  an  individual  loss,  is  balanced  by  a 
communal  gain. 

It  is  evident  that  if  a  money  can  be  had  that 
costs  nothing,  the  first  cost  of  coin  money  is  a 
dead  loss  as  compared  with  such  money,  and  as 
we  must  add  interest,  wear  and  cost  of  coinage 


52  NATURAL  MONEY 

to  the  first  cost,  we  shall  have  a  bill  of  expense 
we  ought  not  to  regard  lightly. 

According  to  Jevons  the  annual  cost  of  in- 
terest, wear  and  mintage  on  a  hundred  million 
pounds  is  .£4,352,000;  in  round  numbers,  $21,- 
750,000  on  five  hundred  million  dollars  of  coin, 
almost  eighty  million  dollars  on  a  billion,  eight 
hundred  millions,  which  is  not  far  from  the 
amount  in  the  United  States.  Add  to  this  one- 
half  the  labor  annually  spent  in  mining  gold, 
as  at  least  one-half  goes  into  coin,  and  we  have 
close  to  one  hundred  million  dollars  annual  loss. 

If  the  world's  total  coin  money  is  eight  bil- 
lions of  dollars  the  world's  annual  loss  is  about 
four  hundred  and  forty  millions  of  dollars. 

The  loss  in  the  United  States  would  pay  an- 
nually for  ten  thousand  miles  of  highway  at 
$10,000.00  the  mile,  or  for  fifty  thousand  miles 
at  $2,000.00  the  mile. 

So  the  cost  of  coin  money  is  a  very  important 
objection  if  it  may  be  avoided  without  a  sacri- 
fice of  the  quality  of  our  money. 

But  the  cost  is  not  necessarily  an  objection. 
If  a  coin  money  is  better  than  any  other  to  any 
considerable  degree  in  its  performance  of  the 
functions  of  money,  such  superiority  will  out- 
weigh the  extra  cost.  On  the  other  hand,  if  it 
does  not  serve  better  than  some  other  that  costs 
less  or  nothing,  then  the  excess  of  coin  cost  is  so 
much  waste. 


THE  PEACEFUL  SOLUTION       53 

But  aside  from  this  there  are  grave  objections 
to  the  use  of  precious  metals  as  money,  some  of 
which  I  will  proceed  to  consider. 

Gold  is  by  far  the  best  money  metal  known, 
and  except  for  fractional  currency  and  denom- 
inations below  five  dollars,  is  probably  better 
than  any  combination  of  metals,  but  is  fatally 
defective  in  that  it  lacks  constancy  of  value,  and 
because  its  value  is  antithetical  to,  instead  of 
representative  of,  general  values.  These  defects 
are  fatal  to  all  precious  metal  moneys  because 
they  are  incurable. 

First,  as  to  lack  of  constancy  of  value:  As 
value  changes  with  change  in  the  relation  of 
supply  and  demand,  and  as  the  amount  of  coin 
money  is  determined  by  influences  other  than 
the  demand  for  money,  the  value  cannot  be  con- 
stant. So  long  as  we  have  those  conditions 
usually  spoken  of  as  "good  times"  this  defect 
is  largely  made  good  by  the  use  of  instruments 
of  credit,  but  this  only  makes  the  disaster  all 
the  worse  when  it  comes,  which  is  always  after 
an  interval  of  only  a  few  years,  usually  be- 
tween ten  and  twenty. 

Besides  the  inconstancy  which  shows  period- 
ically in  the  ruinous  fall  of  prices,  there  is  a 
gradual  change  showing  from  century  to  cen- 
tury, and  even  from  decade  to  decade.  With 
both  gold  and  silver  this  latter  is  a  decline  in 
value;  in  the  case  of  silver  amounting  to  about 


54  NATURAL  MONEY 

50  per  cent,  in  forty  years,  and  in  the  case  of 
gold  probably  more  than  50  per  cent,  in  nearly 
three  centuries  ending  1880;  and  since  then 
probably  20  per  cent,  of  its  value  at  that  date, 
if  not  more. 

It  is  a  curious  fact  that  of  the  excellent  qual- 
ities of  gold,  its  durability,  a  quality  often  men- 
tioned as  one  fitting  it  for  use  as  money,  is  one 
of  the  causes  of  this  fatal  defect  of  inconstant 
value.  The  average  life  of  gold  as  money  is  prob- 
ably 500  years  or  more,  so  that  the  supply  is 
constantly  growing.  Demand  for  money  has 
grown  also,  but  with  the  rapid  movement  of 
goods,  the  enormously  extended  use  of  credit  and 
the  improvement  in  banking,  demand  has  not 
kept  pace  with  the  supply,  the  net  result  being 
an  enormous  decline  in  value. 

Theoretically  at  least  there  is  some  check 
upon  this  expansive  tendency  of  gold  and  silver 
in  the  fact  that  as  they  decline  in  value  they 
are  more  used  in  the  arts,  but  as  this  is  an  effect 
of  the  decline  in  value  its  statement  is  a  decla- 
ration of  the  fact  of  decline. 

As  gold,  once  a  part  of  the  world  supply  of 
money,  continues  to  be  money  for  centuries,  and 
as  the  same  is  true  of  silver  for  a  shorter,  but 
still  very  long  period,  the  quantity  of  coin 
money  at  any  given  time  is  the  effect  of  influ- 
ences that  have  passed  decades  and  even  cen- 
turies before. 


THE  PEACEFUL  SOLUTION      55 

Stated  in  other  terms,  a  coin  currency  is  in- 
curably defective  for  these  reasons: 

It  can  neither  expand  nor  contract  its  volume 
in  response  to  sudden  demands  of  trade. 

It  is  steadily  increasing  in  volume  and  as 
steadily  losing  its  value. 

Though  it  cannot  contract  its  volume  in  re- 
sponse to  lessened  demand,  it  does  contract  in 
effect  (by  hoarding),  but  this  contraction  al- 
ways occurs  when  the  need  is  for  expansion. 

This  inopportune  contraction  takes  place  be- 
cause the  value  of  any  money  whose  volume  is  not 
automatically  responsive  to  change  in  demand, 
is  antithetical  to  general  values;  that  is,  such 
money  value  goes  up  when  general  values  go 
down  and  goes  down  when  general  values  go  up, 
and  there  is  no  influence  to  check  the  divergence 
this  side  of  disaster  to  general  business  inter- 
ests. The  wheat  certificates  formerly  referred 
to  could  not  diverge  from  the  value  of  wheat, 
and  could  not  diverge  widely  from  general  val- 
ues, for  if  the  money  value  of  the  wheat  certifi- 
cates falls  it  simply  means  that  wheat  is  cheap 
as  compared  with  other  things,  and  it  is  not  con- 
ceivable that  men  should  grow  wheat  primarily 
to  get  money  issued  upon  it  when  they  could 
grow  the  higher-priced  things  and  exchange 
them  for  more  money  than  would  issue  against 
the  wheat.  With  such  financial  system  wheat 
would  be  grown  just  as  it  is  now — when  the 


56  NATURAL  MONEY 

value  was  high.  But  under  such  a  system  the 
value  of  wheat  being  nominally  constant,  high 
value  for  wheat  would  simply  have  reference  to 
the  purchasing  power  of  money  expressed  in 
things  other  than  wheat. 

The  wheat  certificates  have  this  advantage 
over  coin  as  money,  that  each  unit  of  such 
money  is  short  lived,  wherefore  there  could  be 
no  steady  decline  due  to  accumulation  over  long 
periods.  With  such  a  system,  when  wheat  was 
cheaper  than  potatoes,  rice,  meat,  etc.,  in  effect 
the  people  would  eat  their  money — eat  more 
wheat — thus  restoring  the  normal  volume  and 
value. 

This  difference  between  moneys  of  antitheti- 
cal value  and  those  of  representative  value  is 
recognized  in  the  "multiple  standard"  money 
which  has  been  proposed  and  widely  discussed. 
Its  adoption  would  free  the  world  from  money 
panics,  but  would  not  give  us  the  ideal  money. 
In  the  multiple  standard  it  is  proposed  to  make 
about  twenty  of  the  leading  world'  staples  the 
standard  of  value,  the  theory  being  that  the 
average  value  of  such  staples  will  be  very  near- 
ly constant.  Jevons  says  (Money  and  the 
Mechanism  of  Exchange,  pp.  327-8) :  "Can 
we  not  conceive  a  multiple  legal  tender,  which 
would  be  still  less  liable  to  variation?  We  esti- 
mate the  value  of  one  hundred  pounds  by  the 
quantities  of  corn,  beef,  potatoes,  coal,  timber, 


THE  PEACEFUL  SOLUTION      57 

iron,  tea,  coffee,  beer  and  other  principal  com- 
modities, which  it  will  purchase  from  time  to 
time.  Might  we  not  invent  a  legal  tender  note 
which  should  be  convertible,  not  into  any  one 
single  commodity,  but  into  an  aggregate  of 
small  quantities  of  various  commodities,  the 
quantity  and  quality  of  each  being  rigorously 
defined?  Thus  a  hundred-pound  note  would 
give  the  owners  a  right  to  demand  one  quarter 
of  good  wheat,  one  ton  of  ordinary  merchant 
bar  iron,  one  hundred  pounds  weight  of  mid- 
dling cotton,  twenty  pounds  of  sugar,  five 
pounds  of  tea,  and  other  articles  sufficient  to 
make  up  the  value.  All  these  commodities  will, 
of  course,  fluctuate  in  their  relative  values,  but 
if  the  holder  of  the  note  loses  upon  some  he  will, 
in  all  probability,  gain  upon  others,  so  that  on 
the  average  his  note  will  remain  steady  in  pur- 
chasing power.  Indeed,  as  the  articles  intp 
which  it  is  convertible  are  those  needed  for  con- 
tinual consumption,  the  purchasing  power  of 
the  note  must  remain  steady  compared  with  that 
of  gold  or  silver,  which  metals  are  employed 
only  for  a  few  special  purposes. 

"In  practice,  such  a  legal  tender  currency 
would  obviously  be  most  inconvenient,  since  no 
one  would  wish  to  have  a  miscellaneous  assort- 
ment of  goods  forced  into  his  possession.  He 
who  wanted  corn  would  have  to  sell  to  other 
parties  the  iron,  beef,  and  other  things  received 


58  NATURAL  MONEY 

along  with  it;  gold,  or  other  metallic  money, 
would  doubtless  be  used  as  the  medium  in  these 
exchanges." 

Truly  this  would  be  a  very  inconvenient 
money,  but  why  make  the  £100  note  redeem- 
able in  a  number  of  things?  Why  not  let  the 
holder  of  the  note  take  whatever  he  wants  of 
one  or  more  things  at  the  market  price?  The 
varying  wants  of  men  will  assure  that  all  the 
several  things  will  be  taken  and  the  market  will 
fix  their  prices  right. 

Better  still,  why  require  him  to  take  any  of 
the  things?  Why  not  leave  people  to  take  them 
who  want  them?  Why  should  the  government 
keep  a  stock  of  all  these  things  on  hand?  Why 
not  re-define  a  pound  as  "such  quantity  of  gold 
as  will  purchase  the  various  articles  referred  to 
(a  unit  of  each)  and  then  redeem  the  <£100 
note  in  that  value  of  gold  on  the  day  of  redemp- 
tion? The  government  does  not  have  to  redeem 
in  the  staples  chosen,  but  only  to  use  them  as 
the  basis  of  value  and  redeem  in  gold  at  the 
market  price  of  gold  expressed  in  the  yalue  of 
the  commodities  chosen  as  the  base. 

With  this  system  nobody  would  care  how 
high  the  price  of  gold  went.  It  could  not  affect 
legitimate  business,  for  the  money  value  would 
be  tied  to  the  world  staples  and  could  vary  only 
as  they  varied.  The  market  has  become  the 
mint.  The  only  danger  would  be  that  gold  might 


THE  PEACEFUL  SOLUTION      59 

become  so  cheap  that  the  government  supply 
would  run  short,  but  this  could  probably  be  pro- 
vided against. 

The  nations  have  not  made  as  good  money 
from  the  precious  metals  as  they  might  have 
made.  In  all  moneys,  either  the  unit  value 
or  number  of  units  must  change.  If  the 
value  of  the  money  is  in  the  money  material, 
then  the  value  of  the  unit  must  change  or  the 
quantity  of  material  constituting  the  unit  must 
be  variable,  allowing  the  units  automatically  to 
multiply.  They  cannot  both  be  fixed.  In  the 
proposed  system  the  value  of  the  unit  will 
change  slightly  because  it  is  the  change  of  value 
that  brings  about  the  change  of  volume,  but 
this  is  only  as  the  rudder  of  a  ship  changes  its 
angle  to  keep  the  general  course  of  the  ship 
straight. 

A  span  is  a  much  less  variable  standard  of 
length  than  a  gold  dollar  is  of  value. 

Increase  of  the  volume  of  money  not  brought 
about  automatically  by  the  demands  of  trade  is 
in  reality  a  debasement  of  the  currency  exactly 
similar  to  the  issuance  of  light-weight  coins,  or 
to  the  plan  of  the  fiatist  who  would,  as  his  crit- 
ics facetiously  say,  simply  increase  the  denom- 
ination of  each  unit  and  thereby  secure  the  de- 
sired volume  of  currency. 

As  the  value  of  a  unit  of  anything  falls  to 
zero  before  the  quantity  becomes  infinite  it 


60  NATURAL  MONEY 

seems  certain  that  after  such  supply  of  a  pre- 
cious metal  as  makes  it  convenient  for  use  as 
money,  additions  serve  only  to  reapportion  the 
total  value,  not  to  increase  it.  Of  course  what- 
ever money  is  in  use  will  have  its  value  en- 
hanced by  increase  of  demand,  but  other  things 
remaining  the  same,  to  double  the  amount  of 
gold  would  probably  decrease  the  unit  value  50 
per  cent,  or  more. 

I  believe  this  is  generally  recognized  as  sound 
doctrine  by  the  best  economists,  but  do  not  re- 
member seeing  it  stated  in  the  form  I  have  put 
it,  that  additions  serve  only  to  reapportion  the 
total  value,  not  to  increase  it.  Prof.  Irving 
Fisher,  of  Yale,  appears  to  take  this  view.  In 
"The  Purchasing  Power  of  Money,"  p.  157,  he 
says:  "We  may  now  restate,  then,  in  what 
casual  sense  the  quantity  theory  is  true.  It  is 
true  in  the  sense  that  one  of  the  normal  effects 
of  an  increase  in  the  quantity  of  money  is  an 
exactly  proportional  increase  in  the  general  level 
of  prices"  (Italics  are  Prof.  Fisher's.) 

If  this  is  true,  free  coinage  of  silver  by  the 
United  States  would  have  the  effect  of  increas- 
ing the  value  of  silver  and  decreasing  the  value 
of  gold.  No  one  can  tell  to  what  ratio  they 
would  come,  and  it  is  not  likely  they  would 
keep  any  ratio  for  a  considerable  time.  Other 
things  being  the  same,  prices  would  rise  in  gold 
countries  because  of  the  increased  supply  of  gold 


THE  PEACEFUL  SOLUTION      61 

coin,  and  in  this  country  would  adjust  them- 
selves to  the  new  conditions,  as  would  the  value 
of  all  credits  given  before  the  change. 

Prof.  Fisher  also  says  in  the  same  volume, 
pp.  249,  250:  "Like  the  surface  of  the  con- 
tinents, the  waters  of  the  sea  contain  many 
times  as  much  gold  as  all  the  gold  thus  far  ex- 
tracted in  the  whole  history  of  the  world,"  and 
adds:  "It  is  to  be  hoped  that  the  knowledge 
of  how  to  get  this  hidden  treasure  may  not  be 
secured.  To  whatever  extent  inventors  and  gold 
miners  might  be  enriched  thereby,  scarcely  a 
worse  economic  calamity  can  be  imagined  than 
the  resulting  depreciation.  It  may  be,  however, 
that  only  by  such  a  calamity  can  the  nations  of 
the  world  be  aroused  to  the  necessity  of  getting 
rid  of  metallic  standards  altogether." 

That  last  sentence  is  worth  a  "five-foot  shelf" 
of  economic  treatises  of  the  vertiginous,  whirl- 
ing dervish  type.  Will  the  world  heed  it?  Will 
it  put  its  money  on  the  solid  foundation  of 
equity  before  we  encounter  the  calamity  of  at- 
taining to  the  "knowledge  of  how  to  get  this 
hidden  treasure"?  What  a  confession!  In  a 
state  of  dreadful  apprehension  lest  we  should 
solve  one  of  the  great  problems  now  before  the 
world!  What  a  calamity  it  would  be  if  gold 
became  so  cheap  that  we  could  use  it  in  place 
of  copper  for  electrical  purposes;  in  place  of 


62  NATURAL  MONEY 

brass,  tin,  aluminum,  and  even  in  place  of  china, 
for  household  ornaments  and  table  ware! 

The  same  principle  is  frequently  illustrated 
in  the  general  market.  This  present  year 
(1911),  an  increased  cotton  crop  is  worth  less 
than  the  smaller  crop  last  year.  There  has  even 
been  discussion  of  the  proposal  to  burn  part  of 
it  that  the  growers  may  realize  more  for  the  re- 
mainder than  they  can  get  for  the  total  crop. 
It  seems  to  be  a  generally  recognized  fact  that 
the  total  value  of  a  little  less  than  enough  of 
anything  exceeds  the  total  value  of  a  little  more 
than  enough. 

This  is  because  the  competition  of  sale  is  so 
much  keener  than  the  competition  of  purchase. 
Under  proper  conditions  the  competition  of  pur- 
chase will  equal  the  competition  of  sale;  then 
there  will  be  no  scramble  for  markets. 


VIII 

DISASTROUS  EFFECTS  OF  FLUCTU- 
ATION IN  THE  VALUE  OF  GOLD 

IITANY  persons  affect  to  think  the  value  of 
gold  is  unchanging,  but  this  is  mere  pre- 
tense or  an  indication  of  ignorance  almost  in- 
credible. Money  is  not  exempt  from  the  opera- 
tion of  the  law  of  supply  and  demand. 

The  gold  money  in  the  world  being  the  ac- 
cumulation of  ages,  its  amount  is  a  practically 
fixed  quantity  for  any  brief  period.  It  is  prob- 
ably not  increased  more  than  three  per  cent,  by 
annual  additions,  probably  by  much  less,  yet  it 
happens  in  almost  every  crisis  that  the  demand 
for  gold  is  increased  enormously;  probably  50 
to  100  per  cent.,  possibly  several  hundred  per 
cent,  within  a  few  days.  This  increase  of  de- 
mand is  not  for  productive  purposes,  but  for 
the  purpose  of  making  settlements,  confidence 
having  been  lost  and  extensions  of  credit  re- 
fused. 

Such  a  crisis  could  not  occur  with  an  ideal 
currency,  but  assuming  its  occurrence  for  the 
sake  of  illustration,  instead  of  a  contraction  re- 
sulting because  everybody  knows  money  is  go- 
ing up  and  goods  going  down,  expansion  would 
begin  at  once  by  the  shifting  of  individuals  from 

63 


64  NATURAL  MONEY 

private  to  public  employment.  Instead  of  in- 
creasing in  such  crisis,  available  coin  actually 
decreases  by  hoarding,  as  will  hereafter  be 
shown.  It  is  claimed  that  gold  used  in  the  arts 
is  melted  and  coined,  and  this  is  pointed  to  as 
an  admirable  natural  provision  to  neutralize  the 
disastrous  effects  of  a  crisis,  but  it  would  seem 
that  if  it  really  does  occur  to  any  considerable 
extent  the  advocates  of  gold  money  would  be 
reluctant  to  admit  it  rather  than  quick  to  pro- 
claim it,  for  it  involves  the  destruction  of  what- 
ever art  value  the  things  melted  may  have.  To 
show  that  the  adjustment  of  the  money  volume 
involves  a  loss  is  a  desperate  argument,  even 
were  the  adjustment  perfect,  and  is  humiliating 
where  the  beneficial  effect  is  so  slight  as  to  be 
only  theoretical. 

But  even  with  such  melting  down  of  art 
works  there  is  always  a  disastrous  net  decrease 
of  coin  at  such  a  time — not  of  the  coin  in  ex- 
istence, but  of  the  available  supply,  for  hoard- 
ing becomes  almost  universal.  Everyone  knows 
that  general  values  are  falling  rapidly;  that  is, 
that  money  value  is  rising.  It  therefore  becomes 
exceedingly  profitable  to  hold  on  to  the  gold  and 
wait  till  general  values  have  touched  bottom  be- 
fore investing.  By  so  doing  the  owner  of  coin 
can  usually  make  from  50  to  100  per  cent,  in  a 
few  months. 

No  one  who  remembers  the  business  wrecks 


THE  PEACEFUL  SOLUTION      65 

of  1873  or  1893  will  think  this  an  extravagant 
statement,  and  for  the  benefit  of  those  who  do 
not  remember,  as  well  as  to  refresh  the  memory 
of  those  who  do,  as  to  the  fearful  results  of  a 
financial  collapse,  we  will  examine  briefly  the 
English  panic  of  1847. 

In  his  "Law  of  Civilization  and  Decay," 
'(Macmillan  &  Co.,  New  York,  1895),  Brooks 
Adams  says: 

"By  the  Bank  Act  the  usurers  became  su- 
preme, and  in  1846  the  crop  failed  even  more 
completely  than  in  1845.  A  drain  set  in  upon 
the  banks,  the  reserve  was  depleted,  and  by  Oct. 
2d,  1847,  the  directors  denied  all  further  ad- 
vances. Within  three  years  of  the  passage  of 
his  statute,  the  event  Loyd  had  foreseen  arrived. 
Monetary  distress  began  to  force  down  prices. 
The  decision  of  the  directors  to  refuse  dis- 
counts created  'a  great  excitement  in  the  stock 
exchange.  The  town  and  country  bankers  hast- 
ened to  sell  their  public  securities,  to  convert 
them  into  money.  The  difference  between  the 
price  of  consols  for  the  account  of  the  14th  of 
October  (only  twelve  days  off),  showed  a  rate 
of  interest  equivalent  to  50  per  cent,  per  annum. 
Exchequer  bills  were  sold  at  35  shillings  dis- 
count. A  complete  cessation  of  private  discounts 
followed.  No  one  would  part  with  the  money 
or  notes  in  his  possession.  The  most  exorbitant 
sums  were  offered  and  refused  by  merchants 


66  NATURAL  MONEY 

for  their  acceptances,'*  consequently  hoarding 
became  general  and,  as  the  chancellor  of  the 
exchequer  afterward  observed,  'an  amount  of 
circulation  which,  under  ordinary  circumstances 
would  have  been  adequate,  became  insufficient 
for  the  wants  of  the  community.'  Boxes  of  gold 
and  bank  notes  in  'thousands  and  tens  of  thou- 
sands of  pounds'  were  'deposited  with  the  bank- 
ers.' The  merchants,  the  chancellor  said,  begged 
for  notes.  'Let  us  have  notes,  we  don't  care 
what  the  rate  of  interest  is,  only  tell  us  we  can 
get  them,  and  this  will  at  once  restore  confidence.' 

"But  after  October  2d  no  notes  were  to  be 
had.  Money  was  a  commodity  without  price, 
and  had  the  policy  of  the  Bank  Act  been  rig- 
orously maintained,  English  debtors,  whose 
obligations  then  matured,  must  have  forfeited 
their  property,  since  credit  had  ceased  to  exist 
and  currency  could  not  be  obtained  wherewith 
to  redeem  their  pledges. 

"The  instinct  of  the  usurer  has,  however, 
never  been  to  ruin  suddenly  the  community  in 
which  he  has  lived.  Only  by  degrees  does  he 
exhaust  human  vitality.  Therefore,  when  the 
great  capitalists  had  satisfied  their  appetites 
they  gave  relief.  From  the  2d  to  the  25th  of 
October  contraction  was  allowed  to  do  its  work; 
then  Overstone  intervened,  the  government  was 

*Theory  and  Practice  of  Banking,  Macleod 


THE  PEACEFUL  SOLUTION      67 

instructed  to  suspend  the  Act,  and  the  com- 
munity was  promised  all  the  currency  it  might 
require. 

"The  effect  was  instantaneous.  The  letter 
from  the  cabinet,  signed  by  Lord  Russell,  which 
recommended  the  directors  of  the  bank  to  in- 
crease their  discounts,  was  made  public  about 
one  o'clock  on  Monday,  the  25th,  and  no  sooner 
was  it  done  so  than  the  panic  vanished  like  a 
dream.  Mr.  Gurney  stated  that  it  produced 
its  effect  in  ten  minutes.  No  sooner  was  it 
known  that  notes  might  be  had,  than  the  want 
of  them  ceased.  Large  parcels  of  notes  were 
returned  to  the  Bank  of  England  cut  into 
halves,  as  they  had  been  sent  down  into  the 
country. 

"There  was  extreme  suffering  throughout  the 
country,  which  manifested  itself  in  all  the  well 
known  ways.  The  revenue  fell  off,  emigration 
increased,  wheat  brought  but  about  five  shillings 
the  bushel,*  while  in  England  and  Wales  alone 
there  were  upward  of  nine  hundred  thousand 
paupers.  Discontent  took  the  form  of  Chart- 
ism, and  a  revolution  seemed  imminent.  Nor 
was  it  Great  Britain  only  which  was  convulsed; 
all  Europe  was  shaken  to  its  center,  and  every- 
thing portended  some  dire  convulsion  when  na- 


*This  notwithstanding  two  successive  crop    failures    in    '45 
and  '4«. 


68  NATURAL  MONEY 

ture  intervened  and  poured  upon  the  world  a 
stream  of  treasure  too  bountiful  to  be  at  once 
controlled.* 

"In  1849  the  first  California  gold  reached 
Liverpool.  In  four  years  the  supply  of  pre- 
cious metals  trebled,  prices  rose,  crops  sold 
again  at  a  profit." 

Did  a  disordered  digestion  ever  produce  such 
a  nightmare?  Not  only  the  merchants,  bankers 
and  "Napoleons  of  Finance"  in  panic,  but  "ex- 
treme suffering  throughout  the  country,"  over 
"nine  hundred  thousand  paupers  in  England 
and  Wales  alone,"  "revolution  imminent,"  and 
"all  Europe  shaken  to  its  center."  And  consid- 
er, too,  that  the  relief  came  by  the  suspension  of 
a  statute  made,  presumably  for  the  benefit  of 
the  people,  and  when  the  law  was  nullified  the 
relief  came  in  ten  minutes.  Then  later  the  "in- 
tervention of  nature,"  when  gold  arrived  from 
California,  trebling  the  supply  of  precious  met- 
als in  four  years. 

Those  conditions  are  such  as  must  occur  every 
few  years,  in  varying  degrees  of  disaster,  under 
any  system  of  money  the  value  of  which  is  anti- 


*"A  stream  of  treasure  too  bountiful  to  be  at  once  controlled," 
is  infinitely  suggestive.  That  was  only  sixty-four  years  ago, 
and  the  stream  of  treasure  is  increasing  from  year  to  year,  but 
it  is  under  control  so  complete  that  only  the  annihilation  of  cer- 
tain sinister  influences  can  save  human  rights. 


THE  PEACEFUL  SOLUTION       69 

thetical  to  instead  of  representative  of  general 
values;  the  value  of  which  goes  up  when  gener- 
al values  go  down  and  goes  down  when  general 
yalues  go  up. 

In  the  account  just  quoted  we  saw  the  dis- 
tress of  merchants  and  men  of  affairs,  with  men- 
tion of  the  fact  that  there  were  900,000  paupers 
in  England  and  Wales  alone.  This  is  bad 
enough,  but  the  full  picture  would  show  tens  of 
millions  of  people  suffering  in  varying  degrees, 
not  only  in  the  acute  stage  of  the  panic,  but 
during  years  before  and  after;  suffering,  but 
still  striving  against  the  fearful  odds,  not  with 
success,  but  not  with  complete  failure. 

Fluctuation  of  the  currency  value  brings  dis- 
aster to  merchants,  manufacturers,  bankers  and 
others,  but  it  brings  still  more  suffering  to  the 
people  at  large  who  live  by  wages.  Value  is 
nimble,  and  the  values  of  things  constantly  be- 
ing produced  and  consumed  will  automatically 
change  from  day  to  day  with  a  fluctuating  cur- 
rency, but  wages  cannot  change  so  promptly, 
and  time  obligations  of  fixed  amount,  such  as 
annuities,  life  insurance  and  long-time  leases, 
cannot  respond  at  all  to  currency  fluctuations. 
As  before  said,  natural  money  could  not,  if 
adopted  during  such  a  crisis,  prevent  all  the  de- 
plorable effects.  They  are  the  culmination  of 
years  of  wrong  methods  and  cannot  be  instant- 
ly cured  by  adopting  the  right  method,  but  the 


70  NATURAL  MONEY 

worst  would  be  avoided  if  in  the  beginning  nat- 
ural money  were  established.  The  idle  would 
immediately  have  employment  and  industry 
would  soon  be  on  a  sound  basis. 

With  the  present  method  of  taxation,  even 
with  the  proposed  system,  one  of  the  two  funda- 
mental causes  of  depression  would  still  be  in 
effect — would  work  inequity  and  would  result 
finally  in  low  wages,  but  not  in  "no  wages." 

Since  writing  the  foregoing,  only  a  few  days 
ago,  the  old  cry  of  "over-production"  comes 
from  one  of  the  leading  beneficiaries  of  "under- 
consumption," if  the  newspaper  report  is  cor- 
rect. The  Philadelphia  Public  Ledger  of  Sept. 
6,  1911,  reports  James  J.  Hill  of  the  Great 
Northern  Railway,  as  saying,  among  other 
things : 

"The  right  proportion  between  people  who 
are  producing  and  those  who  consume  has  not 
been  maintained.  While  recent  years  have  seen 
an  increase  of  hundreds  of  thousands  of  em- 
ployes engaged  in  industrial  enterprises,  there 
has  been  a  decrease  in  the  number  of  men  tilling 
the  soil." 

And  the  Public  Ledger  adds: 

"He  said  that  the  country's  consumptive  pow- 
ers would  have  to  catch  up  with  its  capacity  for 
producing  before  business  would  feel  an  impe- 
tus." 


THE  PEACEFUL  SOLUTION      71 

This  is  a  warning  similar  to  previous  ones 
from  the  same  source,  but  nowhere  does  Mr. 
Hill  indicate  a  shortage  of  "things  to  use."  If 
we  were  living  in  conditions  of  equity,  where 
each  one  who  cooperated  in  production  got  his 
proper  share  of  the  total  product,  what  would 
happen  if  one  of  high  standing  should  announce 
that  "the  country's  consumptive  powers  would 
have  to  catch  up  with  its  capacity  for  produc- 
ing?" Would  not  the  little  children  in  the  cot- 
ton mills  and  on  the  coal  dumps;  the  men  and 
women  in  the  sweat  shops,  and  the  84-hours-a- 
week  men  in  the  mills  shout  with  gladness  be- 
cause of  a  well-earned  vacation?  That  is  wjiat 
ought  to  happen,  but  it  does  not.  Even  these 
children  and  women  and  men  are  afraid  they 
will  not  have  to  continue  their  killing  tasks. 
No,  they  do  not  hail  the  respite,  and  Mr.  Hill's 
prophecy  was  not  of  holidays,  but  of  enforced 
idleness  and  want — want  for  the  very  things 
their  industry  produced  in  such  abundance  that 
the  mills  must  shut  down  to  let  "the  country's 
consumptive  powers  catch  up  with  its  capacity 
for  producing." 

The  difficulty  is  so  plain  that  any  man  can 
see  it  who  does  not  approach  the  subject  already 
believing  it  incomprehensible.  It  is  perfectly 
plain  that  if  a  colony  of  people  are  engaged  in 
growing  food  and  making  the  numerous  things 
they  need  to  use  they  will  never  have  any  dif- 


72  NATURAL  MONEY 

ficulty  on  account  of  "over-production,"  and  if 
such  a  communistic  or  socialistic  society  change 
to  individualistic  and  then  find  that  some  are  in 
dire  want  while  others  have  not  only  more  than 
they  can  consume,  but  more  than  they  can 
waste,  it  is  evident  the  difficulty  is  not  one  of 
production,  but  of  inequitable  division  of  the 
fruits  of  industry. 

Suppose  such  a  socialist  colony  living  whole- 
somely and  happily  on  about  such  plane  as 
many  of  our  grandparents  did  less  than  a  hun- 
dred years  ago,  and  that  three  or  four  some- 
kind-or-other  magnates  come  along  and  induce 
these  simple,  industrious  people  to  be  "taken 
over"  for  the  sake  of  considerably  more  in 
wages  than  they  are  now  producing.  In  a  short 
time  the  output  is  doubled,  but  forty  per  cent, 
of  it  goes  to  the  magnates  and  they  are  not 
able  to  consume  it.  They  do  not  get  it  in  goods, 
but  in  credits;  the  goods  accumulate  from  year 
to  year,  and  by  and  by  are  offered  even  below 
the  cost  of  production;  some  mills  are  forced  to 
shut  down,  others  to  run  on  short  time  or  with 
reduced  force,  and  the  condition  Mr.  Hill  de- 
scribes as  "over-production"  is  present  with  all 
its  suffering. 

And  in  the  year  of  Our  Lord,  1911,  such  ex- 
planations are  soberly  considered  by  men  who 
pose  as  leaders  of  thought! 


IX 

CONSTANCY   OF   VALUE 

TT  is  evident  from  the  foregoing  that  so  far  as 
the  disaster  is  attributable  to  the  money 
system,  it  is  caused  by  the  fluctuation  of  the 
money  value;  its  sudden  and  great  increase  of 
purchasing  power.  We  have  also  seen  that  for 
long  periods  its  value  is  steadily  declining,  and 
indications  now  are  that  during  the  present 
century,  perhaps  within  fifty  years,  it  will  lose 
one-half  of  its  present  value. 

It  is  evident  that  the  only  way  to  escape  the 
disasters  that  come  through  these  ever-recurring 
panics  is  to  adopt  a  money  as  nearly  constant  in 
value  as  it  is  possible  to  devise.  When  we  have 
such  a  money  we  shall  have  no  more  financial 
rigors,  for  such  system  will  work  with  the  same 
certainty  and  exactness  as  all  natural  laws;  as 
the  law  of  gravity. 

It  may  be  thought  that  this  is  an  extravagant 
statement,  and  to  those  who  think  the  eternal 
pull  of  gravity  is  best  exemplified  by  the  moun- 
tain peak  that  has  stood  for  ages,  it  is  so.  But 
this  is  not  a  fit  illustration.  The  unchanging 
mountain  peak  illustrates  static  gravity,  but  in 
economics  we  are  dealing  with  kinetic  energy; 
with  forces,  vital  forces,  in  flux  and  interaction, 


74  NATURAL  MONEY 

and  the  true  parallel  is  gravity's  action  upon 
moving  bodies,  upon  the  worlds  revolving  in 
paths  about  the  sun.  These  paths  are  said  to  be 
ellipses,  but  there  are  constant  perturbations, 
and  only  in  the  larger  sense  are  the  paths  of 
travel  constant.  But  the  corrections  never  fail, 
they  are  automatic,  and  thus  the  worlds  are  all 
held  safe  "in  the  hollow  of  His  hand." 

So  shall  our  social  interests  be  held  safe 
when  our  laws  are  not  makeshift  inventions,  but 
discoveries  and  application  of  natural  laws.  It 
has  already  been  stated  that  the  purchasing 
power  of  the  proposed  money  will  fluctuate 
within  a  very  narrow  range;  that  is,  prices  will 
rise  and  fall.  This  is  necessary  because  it  is 
the  slight  change  in  general  values  that  brings 
about  the  adjustment  of  currency  volume,  just 
as  the  speed  of  an  "automatic"  steam  engine  is 
kept  almost  constant  by  the  fact  that  if  the 
speed  slackens  the  actuation  of  the  governor 
gives  it  more  steam,  and  if  the  speed  increases 
slightly  beyond  normal,  the  actuation  of  the 
governor  reduces  the  steam  supply. 

Suppose  an  ignorant  engineer  should  so  cou- 
ple up  the  governor  of  his  engine  that  the  slow- 
er it  ran  the  less  steam  it  would  get  and  the 
faster  it  ran  the  more  steam  it  would  get  at 
each  stroke;  what  would  be  the  result?  Either 
the  engine  would  stop  for  want  of  steam  or  it 


THE  PEACEFUL  SOLUTION      75 

would  run  at  a  constantly  increasing  speed  until 
it  destroyed  itself. 

Money  is  the  blood  of  commerce,  the  circula- 
tory system  of  the  business  world,  but  the  gov- 
ernor of  the  engine  that  is  the  heart  of  com- 
merce is  coupled  up  in  reverse  order,  with  the 
result  that  the  engine  is  kept  ruinously  racing 
until  the  load,  acting  as  a  brake,  stops  the  in- 
crement of  speed,  when  it  rapidly  slows  down  to 
collapse. 

With  a  coin  currency  as  now  used;  that  is, 
with  the  unit  consisting  of  a  fixed  quantity  of 
the  metal,  the  governor  cannot  be  coupled  up 
properly;  and  the  variable  quantity  unit  is  not 
perfectly  convenient;  not  wholly  automatic  in 
its  workings. 

Let  us  now  examine  as  to  the  positive  benefits 
to  be  derived  from  constancy  of  value,  for  its 
merits  are  not  all  included  in  the  avoidance  of 
disaster. 

It  may  seem  unnecessary  to  show  what  con- 
stancy of  value  is,  but  it  will  appear  that  this  is 
a  very  important  point  and  by  no  means  so 
clear  that  all  are  agreed  upon  it. 

In  his  "Money  and  the  Mechanism  of  Ex- 
change," r(D.  Appleton  &  Co.,  New  York, 
1875)',  p.  38,  Jevons  says  upon  this  subject: 
"The  ratios  in  which  money  exchanges  for  other 
commodities  should  be  maintained  as  nearly  as 
possible  invariable  on  the  average." 


76  NATURAL  MONEY 

This  is  not  an  obvious  fallacy,  for  such  a 
money  would  be  a  vast  improvement  on  any 
money  in  use,  but  it  would  not  be  ideal.  It 
would  be  in  effect  a  realization  of  the  multiple 
standard  whereby  it  is  proposed  to  make  the 
world  staples  the  standard  of  value. 

Constancy,  or  stability  of  value,  does  not 
mean  keeping  level  with  general  values,  for  with 
constant  increase  in  productiveness  of  labor,  gen- 
eral values  should  be  forever  falling.  A  money 
of  constant  value,  therefore,  has  a  gradually  as- 
cending ratio  to  general  values — will  exchange 
for  more. 

My  contention  is  that  the  ideal  money  is  of 
this  sort;  that  it  will  always  buy  more  of  the 
world's  products  than  at  any  previous  time 
(barring  temporary  scarcity  and  influences  un- 
related to  the  money  system),  but  the  minimum, 
or  common  labor  money  wage,  remains  forever 
unchanged.  This  is  far  better  than  to  have 
the  money  value  fall  with  general  values,  for 
the  reason  that  it  avoids  the  necessity  of  chang- 
ing the  basic  money  wage  and  leaves  the  real 
return  to  the  laborer  to  be  fixed  by  the  opera- 
tion of  all  the  influences  that  express  them- 
selves in  price.  These  influences  act  automati- 
cally, and  during  every  instant  of  time.  They 
do  not  wait  for  the  week-end  when  the  laborer  re- 
ceives his  envelope  to  increase  his  pay,  but  in- 
crease it  while  he  works  and  while  he  sleeps. 


THE  PEACEFUL  SOLUTION      77 

Under  this  kind  of  a  money  system,  barring 
unrelated  and  contrary  influences,  such  as  a 
short  crop,  the  real  wage  will  forever  advance 
without  waste  of  time  in  conferences  between 
employers  and  employes,  who  could  not  weigh 
all  the  influences  operating  and  arrive  at  an 
equitable  settlement  under  a  money  of  falling 
value  (one  that  would  always  exchange  for 
other  commodities  at  the  same  average  ratio), 
even  if  they  were  very  wise  and  wholly  unselfish. 

Then  there  are  many  employes  who  are  en- 
gaged by  the  year  or  other  term,  and  officials 
whose  terms  extend  over  a  period  of  years  and 
whose  salaries  are  not  easily  changed.  These 
should  have  their  share  of  the  benefits  arising 
out  of  general  progress,  but  could  not  get 
it  if  the  purchasing  power  of  the  money  did  not 
gradually  increase.  The  same  is  true  of  annui- 
tants, of  persons  who  have  passed  the  produc- 
tive period  of  life  and  are  living  on  their  sav- 
ings, and  of  those  persons  whose  compensa- 
tion is  to  a  degree  fixed  by  customs  not  easily 
changed.  A  barber,  for  instance,  could  not 
well  increase  his  charge  except  by  adding  five 
cents ;  but  five  cents  is  33  1-3  per  cent,  of  the 
usual  charge  for  a  shave. 

Change  of  price,  when  production  and  com- 
petition are  not  modified  by  monopoly,  is  auto- 
matic and  prompt,  but  wage  changes  lag  be- 
hind, both  as  to  advance  and  decrease,  though 


78  NATURAL  MONEY 

not  so  much  in  decrease  as  in  advance,  because 
employers,  being  fewer  in  number,  can  act  more 
promptly  than  large  bodies  of  men,  and  also  be- 
cause they  are  in  a  position  to  grasp  the  situa- 
tion more  promptly. 

Constancy  of  value  in  the  money  will  also  op- 
erate automatically  and  promptly  to  lower 
wages  when  general  values  are  high,  but  this 
will  be  only  in  case  of  scarcity,  and  then  wages 
ought  to  be  less  without  lockouts  or  nominal 
changes,  for  only  in  this  way  are  the  employers 
relieved  of  a  hardship,  and  the  burden  of  an 
unfruitful  year  distributed  with  exact  justice. 

It  is  not  quite  correct  to  speak  of  a  general 
advance  of  values  as  resulting  from  an  unfruit- 
ful year,  for  it  does  not  apply  to  manufactures, 
except  such  as  depend  upon  the  annual  crops 
for  their  raw  material. 

From  all  these  considerations  it  seems  cer- 
tain that  the  value  of  the  ideal  money  is  con- 
stant, its  purchasing  power  forever  increasing 
because  in  a  state  of  progression  general  values 
are  forever  falling.  This  may  seem  like  a  rash 
statement  to  those  who  think,  with  John  Stuart 
Mill,  for  instance,  that  "there  is  no  such  thing 
as  a  general  rise  or  a  general  fall  of  values. 
Every  rise  of  value  supposes  a  fall  and  every 
fall  a  rise."  The  attempt  of  this  really  great 
economist  to  define  value  is  not  unlike  an  at- 
tempt to  describe  the  positions  of  objects  that 


THE  PEACEFUL  SOLUTION      79 

are  moving  rapidly  and  confusedly,  by  referring 
each  to  all  the  others.  It  is  impossible  to  state 
altitude  intelligently  without  a  datum  or  level 
from  which  to  measure  it.  Every  altitude  has 
a  ratio  to  every  other  altitude,  which  may  be 
expressed  in  figures,  but  what  infinite  confus- 
sion  it  would  be  if  we  could  not  express  the 
height  of  a  mountain  by  giving  its  height  above 
the  sea  level,  but  only  by  saying  it  is  "half  as 
high"  or  "twice  as  high"  as  some  other  moun- 
tain. Suppose  that  we  decided  to  obviate  some 
of  the  difficulty  by  selecting  a  certain  mountain 
for  a  standard.  If  we  were  then  told  that  alti- 
tude is  the  "ratio  of  height"  we  should  rightly 
think  topographical  science  to  be  in  a  very  crude 
stage.  Even  after  the  adoption  of  the  sea  level 
as  a  datum  from  which  to  measure  elevations 
on  the  earth,  we  should  think  of  a  man  as  of 
the  earth  earthy  who  should  declare  it  impos- 
sible that  all  altitudes  could  sink.  We  cannot 
properly  say  there  can  be  no  general  lowering 
of  altitudes,  for  there  may  be  a  continental 
sinking  or  a  general  lowering,  including  the  sea 
level.  The  earth  may  shrink  many  miles  in  di- 
ameter and  we  may  or  may  not  be  able  to  detect 
it.  In  like  manner  all  values  may  fall,  includ- 
ing the  value  of  money,  or  general  values  may 
fall  and  money  value  remain  constant,  which  lat- 
ter is  the  desirable  condition. 

By  "low  values,"  if  the  expression  be  prop- 


80  NATURAL  MONEY 

erly  used,  we  mean  that  things  are  easier  to  get 
than  formerly,  and  when  this  is  true  of  things 
in  general,  but  not  of  money,  it  is  proper  to 
speak  of  money  value  as  being  constant  and  of 
other  values  as  falling. 

It  is  conceivable  that  progress  may  continue 
to  the  point  where  everything  will  be  produced 
in  such  abundance  and  with  so  little  labor  that 
values  will  disappear.  Surely  it  would  then  be 
admitted  that  a  general  fall  of  values  had  taken 
place. 

Some  writer  has  likened  value  to  an  obstacle 
or  difficulty  which  must  be  overcome  in  order  to 
acquire  a  desired  object.  If  we  define  it  as  "re- 
sistance to  acquisition"  it  then  becomes  plain 
that  all  values  may  fall,  for  it  is  obvious  that 
tilings  not  only  may  become  easier  to  get,  but 
that  they  should  be  easier  to  get  from  year  to 
year,  and  failure  to  recognize  this  fact  is,  to  a 
degree,  failure  to  connect  the  science  of  politi- 
cal economy  with  human  life. 

It  may  be  contended  that  the  money  wage 
should  change,  because,  as  humanity  advances, 
the  hours  of  daily  labor  will  gradually  be  re- 
duced from  eight  or  ten  hours  to  five  or  six  a 
day,  or  even  to  three  or  four,  and  that  in  this 
event  if  the  money  wage  remain  the  same  then 
we  may  properly  say  that  money  value  has 
faUen. 

Even  this  contention  is  not  sound.     When 


THE  PEACEFUL  SOLUTION      81 

the  hours  of  labor  are  reduced  under  free  con- 
ditions they  are  reduced  because  the  product  of 
fewer  hours  is  greater  than  formerly  was  the 
product  of  more  hours.  A  lad  of  twelve  or  fif- 
teen alone  on  an  island  might  have  to  toil  fifteen 
hours  to  sustain  life.  As  he  grew  stronger  and 
more  skillful  he  could  get  more  in  less  time,  and 
we  should  not  think  of  referring  to  his  increased 
product  as  being  less,  even  in  value. 

Humanity  is  growing. 

However,  I  do  not  believe  development  will 
be  along  the  line  of  constantly  shortening  the 
work  day.  To  the  man  worn  by  long  hours  of 
toil,  inaction  may  seem  the  delectable  state,  but 
he  is  not  really  striving  for  fewer  hours  of  em- 
ployment. He  is  striving  to  achieve  emanci- 
pation from  necessity;  not  that  he  may  lessen 
effort,  but  that  he  may  direct  effort  to  higher 
aims;  may  make  it  minister  to  his  aspirations 
instead  of  merely  serving  his  necessities.  If  he 
does  not  so  direct  his  effort,  does  not  aspire,  but 
uses  the  free  time  he  has  won  for  indulgence  or 
sloth,  he  shall  relapse  into  a  slavery  worse  than 
that  from  which  he  has  emerged,  for  slavery  to 
passions  and  appetites  is  the  basest  serfdom,  and 
sloth  is  but  a  slower  death. 

It  is  not  a  shorter  day  men  want,  but  fewer 
days  of  work ;  or  better  still,  fewer  days  of  work 
in  the  year  and  fewer  years  of  work  in  a  life; 
more  holidays  when  a  considerable  percentage 


82  NATURAL  MONEY 

of  the  people  are  disengaged,  with  a  week  or 
two  of  general  vacation  in  the  spring  and  fall, 
but  with  eight  or  even  twelve  hours  a  day  for 
the  work  time  when  at  work.  This  will  make 
for  the  development  of  men  far  more  than  a 
shorter  day,  but  the  same  work  tune.  Time  off 
from  livelihood  work  is  effective  for  develop- 
ment about  in  proportion  to  the  square  of  its 
continuous  duration. 

Another  consideration  favorable  to  a  money 
of  constant  value;  that  is,  with  a  purchasing 
power  that  absorbs  the  increase  of  productive- 
ness, is  its  effect  on  the  interest  rate.  If  money 
is  known  to  be  shrinking  in  value,  making  a  con- 
stant advance  of  prices,  it  would  seem  the  in- 
terest rate  must  continue  high,  as  men  can  buy 
for  an  advance.  Per  contra,  if  general  values 
are  falling  men  can  do  better  to  loan  money  or 
credits  and  buy  later  at  lower  prices.  If  general 
values  were  known  to  be  decreasing  each  year  by 
a  substantial  amount,  say  two  or  three  per  cent, 
(economic  advance  being  so  rapid),  the  interest 
rate  for  money  loans  would  be  at  least  two  or 
three  per  cent,  below  the  rate  for  property 
loans. 

It  appears,  therefore,  that  Jevons'  implied 
statement  that  constancy  of  value  consists  in 
maintaining  a  fixed  average  ratio  to  "other 
commodities"  is  not  sound.  He  probably  had  in 
mind  the  constantly  falling  value  of  coin  and 


THE  PEACEFUL  SOLUTION      83 

had  not  considered  the  fact  that  a  money  of 
constant  value  enjoys  a  constantly  increasing 
purchasing  power  because  of  increasing  produc- 
tiveness.* 


*When  increase  or  decrease  of  value  is  spoken  of  as  ap- 
plying to  natural  money  it  will  'be  understood  that  the  ex- 
pression is  used  to  avoid  circumlocution  and  that  the  change 
is  really  in  general  values. 


INCONVERTIBLE  CURRENCY 

INCONVERTIBLE  currencies  have  failed  so 
•^  often  that  economists  generally  pronounce 
against  them,  and  yet  in  such  terms  and  with  such 
qualifications  (sometimes,  at  least,)  as  seem  to 
indicate  a  belief  in  them  in  spite  of  failure.  It 
does  not  appear  to  have  occurred  to  them  that 
coin  systems  of  money  have  failed  oftener  than 
the  inconvertibles ;  that  they  fail  every  few  years : 
in  fact  have  failed  so  often  and  so  regularly  that 
they  are  thought  to  have  a  periodicity  of  fifteen 
to  twenty  years.  Indeed,  there  does  not  seem  to 
be  any  doubt  in  anyone's  mind  except  as  to  the 
time  of  failure.  Yet  we  have  libraries  of  learned 
volumes  on  the  subject  of  money  from  which  it 
would  be  easy  to  compile  an  apotheosis  of  gold 
and  silver  requiring  a  large  volume  to  contain  it. 
And  these  same  writers  give  accounts  of  disasters 
under  inconvertible  and  coin  currencies,  appar- 
ently with  never  a  suspicion  that  there  is  any 
similarity  of  cause  in  the  two  cases.  This  is 
because  they  have  not  recognized  the  truth  that 
every  currency  in  the  world  is  an  inconvertible 
currency  in  fact  whatever  it  may  be  in  name. 

In   America,    England    and    Europe,    when 
times  are  good,  anywhere  from  75  per  cent,  to 

84 


THE  PEACEFUL  SOLUTION      85 

90  per  cent,  of  what  performs  the  function  of 
money  consists  of  credit  instruments.  Nominal- 
ly these  credits  are  convertible  into  coin,  but 
practically  they  never  are  and  never  can  be, 
and  the  collapse  always  comes  when  the  attempt 
is  made  to  convert  them.  They  are  just  what 
Jevons  says  the  inconvertibles  are,  "in  all  in- 
stances put  in  circulation  as  convertible  ones, 
or  in  place  of  such,  and  they  are  always  ex- 
pressed in  terms  of  money." 

The  same  eminent  authority  also  says  ("Mon- 
ey and  the  Mechanism  of  Exchange,"  p.  234) : 
"There  is  plenty  of  evidence  to  prove  that  in- 
convertible paper  money,  if  carefully  limited  in 
quantity,  can  retain  its  full  value.  Such  was 
the  case  with  the  Bank  of  England  notes  for 
several  years  after  the  supension  of  specie  pay- 
ments in  1797,  and  such  is  the  case  with  the 
present  notes  of  the  Bank  of  France." 

The  use  of  the  expression  "if  carefully  lim- 
ited in  quantity,"  shows  that  he  had  no  concep- 
tion of  a  natural  money  that  would  be  self -reg- 
ulating. 

And  if  it  is  true,  as  I  believe  it  is,  that  in- 
crease of  the  coin  volume  adds  little  or  no  value, 
but  only  subdivides  it  more  minutely;  that  is, 
if  prices  go  up  about  in  proportion  as  the  coin 
volume  increases,  is  it  not  plain  that  the  value 
of  a  coin  money  is  exactly  like  that  of  the  in- 
convertibles heretofore  used,  and  that  its  only 


86  NATURAL  MOXEY 

advantage  is  that  the  coin  itself  cannot  be  in- 
creased by  official  act,  whereas  the  inconvertibles 
heretofore  used  could  so  be  increased? 

But  the  credits  supposed  to  be  based  on  coin, 
though  not  in  fact  so  based,  being  really  based 
on  a  universal,  but  misplaced  confidence  in  the 
economic  fallacy,  are  not  only  subject  to  "over 
issue"  by  official  act,  but  are  subject  to  both 
increase  and  decrease  by  the  self -constituted  dom- 
inators  of  credits,  who  are  thereby  able  to  whip- 
saw  the  people;  to  "catch  them  going  and  com- 
ing," as  the  expressive  phrase  puts  it. 

It  is  plain,  then,  that  a  self-regulating  incon- 
vertible is  better  than  coin,  because 

The  advantage  of  coin,  that  it  cannot  be  in- 
creased by  official  act,  is  more  than  offset  by 
the  fact  that  it  cannot  be  increased  nor  de- 
creased to  any  adequate  extent  by  the  demands 
of  trade. 

That  it  decreases  by  hoarding  when  the  de- 
mands of  trade  are  for  an  increase. 

That  credits,  which  perform  most  of  the  func- 
tions of  money  under  a  coin  system,  are  sub- 
ject to  increase  and  decrease  by  interests  that 
profit  at  the  expense  of  the  people. 

So  the  difficulty  of  inconvertibles  is  not  in  the 
principle  involved,  but  in  the  imperfect  meth- 
ods of  applying  it  in  practice.  The  same  author 
says  (p.  235) :  "The  principal  objections  to  an 
inconvertible  paper  currency  are  two  in  num- 


THE  PEACEFUL  SOLUTION      87 

ber :  ( 1 )  The  great  temptations  which  it  offers 
to  over-issue  and  consequent  depreciation.  (2) 
The  impossibility  of  limiting  its  amount  in  ac- 
cordance with  the  requirements  of  trade." 

The  second  objection  includes  the  first,  for  it 
is  plain  that  if  "the  requirements  of  trade"  can 
be  made  to  regulate  the  volume,  and  if  there  is 
no  legislative,  executive  or  judicial  power  to 
regulate  it  except  by  constitutional  amendment, 
the  volume  will  always  be  right  and  the  value 
will  be  as  nearly  constant  as  the  speed  of  a  Cor- 
liss engine. 

"The  great  temptations  to  over-issue  and  con- 
sequent depreciation"  are  the  very  things  that 
bring  disaster  where  coin  currency  is  used,  but 
the  over-issue  is  of  private  credits,  and  when  the 
collapse  comes,  as  it  always  does  in  a  few  years, 
it  is  not  a  burden  that  falls  on  the  people  as  a 
whole,  debtors  and  creditors,  but  is  a  burden  on 
the  debtor  class  and  a  source  of  gain  to  the 
creditor  class,  and  in  addition  to  this,  business 
being  paralyzed,  nearly  all  are  injured  by  the 
demoralization  and  partial  suspension  of  indus- 
try. An  over-issue  of  the  proposed  money 
could  not  occur  except  in  case  of  war,  the  cost 
of  which  would  be  the  over-issue,  a  non-interest 
bearing  debt,  and  the  contraction  (payment  of 
the  debt)  would  extend  over  a  period  of  years 
and  be  an  equitably  distributed  burden  upon 
all.  The  contraction  of  credits,  under  a  coin 


88  NATURAL  MONEY 

currency  is  sudden  and  disastrous,  and  works 
a  ruinous  transfer  of  titles  to  the  actual  wealth 
of  the  country.  Yet  the  people,  even  the  bankers 
and  men  of  marvelous  sagacity  in  planning  and 
executing  great  enterprises,  are  fooled  decade 
after  decade  and  century  after  century  by  the 
fiction  of  a  coin  currency,  when  in  fact  the  coin 
is  so  small  a  fraction  of  the  real  (though  not 
legal)  medium  of  exchange  that  it  serves  only 
as  a  hard  spot  to  fall  on  when  the  crash  comes. 
The  so-called  statesman  addressing  the  people 
on  the  beauties  and  desirability  of  a  coin  cur- 
rency is  a  re-incarnation  of  the  fakir  selling  the 
people  pebbles  with  which  to  make  "rock  soup." 
Honest?  Of  course  he  is  honest.  Superstitions 
are  always  honestly  believed  until  we  discover 
they  are  superstitions. 

Translated  into  plain  terms,  his  recipe  for  a 
sound  currency  of  the  rock  soup  variety  is: 
"Take  two  billions  of  this  yellow  metal  and 
mix  well  with  ninety  millions  of  industrious,  en- 
terprising people.  This  is  your  soup  stock.  To 
prepare  for  serving,  add  about  twenty  billions 
of  confidence  expressed  in  the  form  of  credit 
instruments,  and  you  have  your  currency  rock 
soup."  He  ought  to  add  that  with  this  cur- 
rency rock  soup  there  is  always  a  tendency  for 
every  one  of  the  ninety  millions  to  add  a  pinch 
of  confidence  and  that  this  cannot  be  prevented; 
that  when  a  certain  point  of  excess  confidence  is 


THE  PEACEFUL  SOLUTION      89 

reached  the  confidence  evaporates  like  a  flash; 
that  then  there  is  soup  only  for  those  at  the 
head  of  the  table,  and  scarce  enough  for  them, 
hut  another  kettle  will  be  prepared  by  and  by, 
when  all  who  survive  the  interval  will  be  served, 

As  there  cannot  be  gold  enough  to  be  money 
enough  because  the  value  decreases  as  rapidly 
as  the  volume  increases,  and  as  a  coin  currency 
must  be  supplemented  by  many  times  its  volume 
of  credits,  which  serve  temporarily  as  a  medium 
of  exchange  and  are  always  suddenly  "demone- 
tized" by  failure  of  confidence,  it  is  evident  that 
the  weakness  of  a  coin  currency  is  no  less  of  a 
menace  than  that  of  inconvertibles  heretofore  in 
use,  and  is  in  fact  of  the  same  character. 

It  is  therefore  plain  that  whatever  legal  tender 
money  we  have,  the  real  medium  of  exchange 
must  be  in  the  main  inconvertible  credit  even 
though  nominally  payable  in  coin. 

It  is  plain  also  that  every  inconvertible  money, 
the  volume  of  which  is  regulated  other  than  by 
the  demands  of  trade,  is  fatally  defective  and 
must  break  down  sooner  or  later. 

Wherefore  we  may  as  well  abandon  the  su- 
perstition of  providing  a  hard  spot  to  fall  on; 
recognize  the  fact  that  the  only  sound  money  is 
an  inconvertible  one,  and  adopt  such  a  one  as 
shall  have  its  volume  regulated  by  the  demands 
of  trade  and  not  be  affected  by  any  other  in- 
fluence. 


90  NATURAL  MONEY 

The  proposed  system  will  furnish  such  a 
money. 

Wherever  regulation  of  the  volume  of  an  in- 
convertible money  rests  with  the  executive  de- 
partment of  government,  or  even  with  congress 
by  ordinary  enactment,  the  temptation  to  over- 
issue is  a  fatal  defect,  for  whether  over-issue 
occur  or  not,  there  is  always  danger  that  it  may 
occur  in  the  future,  and  this  danger  cannot  be 
eliminated;  and  as  the  value  of  such  money  is 
antithetical  to  general  values  (goes  up  when 
they  go  down  and  down  when  they  go  up),  it 
is  not  merely  temptation  to  over-issue,  but  an 
irresistible  pressure  to  do  something  in  desper- 
ate circumstances,  and  knowing  nothing  else 
to  do,  the  over-issue  is  made. 

As  this  temptation  to  over-issue  is  usually 
considered  the  peculiar  defect  of  inconvertibles, 
it  is  well  to  emphasize  by  repetition  that  coin 
is  open  to  the  same  objection,  by  the  expansion 
of  credits,  and  that  in  large  measure  this  is  done 
by  individuals  who  profit  by  it.  Such  over-issue 
preceded  the  panics  of  1893  and  1907,  in  fact, 
all  panics.  In  1893  and  1907  the  banks,  wise- 
ly, I  believe,  issued  Clearing  House  certificates 
which  temporarily  served  as  money,  and  arbi- 
trarily refused  to  pay  out  money  to  depositors 
except  in  very  limited  amounts.  This,  too,  was 
probably  wise,  for  it  curtailed  speculation,  but 
it  shows  the  defects  of  the  money  system,  and 


THE  PEACEFUL  SOLUTION      91 

that  a  coin  currency  is  not  free  from  the  weak- 
ness of  the  inconvertibles,  "temptation  to  over- 
issue" the  credits. 

The  Clearing  House  certificates  referred  to 
were  not  a  part  of  the  over-issue.  They  were 
a  kind  of  panic  parachute  to  break  the  fall  in 
the  general  collapse  following  the  preceding 
over-issue  of  credits,  a  special  brand  of  "con- 
fidence" to  put  in  the  currency  "rock  soup"  when 
the  other  had  evaporated,  and  proved  decidedly 
acceptable.  They  might  be  called  a  "wind  pud- 
ding" dessert  substituted  for  the  soup  and  other 
courses  that  failed. 

Formerly,  but  not  now,  the  temptation  to 
over-issue  attached  to  the  coin  itself,  for  de- 
basement of  the  coin,  over-valuation  of  the  met- 
al, is  nothing  but  over-issue.  Of  this  the  same 
eminent  authority  says  in  the  same  volume  (p. 
80)  :  "The  annals  of  coinage  in  this  [England] 
and  all  other  countries,  are  little  more  than  a 
monotonous  repetition  of  depreciated  issues,  both 
public  and  private,  varied  by  occasional  merito- 
rious, but  often  unsuccessful,  attempts  to  re- 
store the  standard  of  the  currency." 

It  is  true  that  such  "over-issue"  of  coin  is 
more  obviously  fraudulent  than  improper  ex- 
pansion of  inconvertibles,  and  is  therefore  less 
likely  to  be  resorted  to;  but  the  unwarranted 
expansion  of  credits  under  the  coin  system,  and 
expansion  and  contraction  by  shrewd  and  un- 


92  NATURAL  MONEY 

scrupulous  manipulators,  is  not  open  to  view, 
and  is  a  danger  more  completely  hidden  than 
that  of  the  inconvertible. 

There  is  a  conceivable  danger,  but  not  a  dan- 
ger in  fact,  that  applies  to  the  proposed  money 
and  to  all  inconvertibles,  from  which  coin  is  ex- 
empt in  a  slight  degree,  and  that  is  the  possi- 
bility that  the  government  may  abandon  the 
system  in  use  and  substitute  another.  There 
may  have  been  a  time  when  this  possibility  was 
a  real  danger,  but  now  it  is  negligible,  for  in 
this  day  of  international  commerce  and  world- 
wide private  interests  no  nation  can  afford  to 
deal  in  bad  faith.  The  only  advantage  of  a 
coin  money  in  such  circumstances  is  the  coin  in 
hand,  for  a  coin  obligation  that  is  not  paid  is  as 
worthless  as  any  other. 

Such  small  salvage  "in  case  of  a  wind-up" 
and  abandonment  of  the  system  is  of  no  weight. 
The  proposed  system  will  eliminate  not  only 
the  fear  of  a  wind-up,  but  all  concern  in  regard 
to  the  currency.  There  will  be  no  more  thought 
of  "seeking  relief"  from  the  Secretary  of  the 
Treasury,  or  of  importuning  congress  for  finan- 
cial legislation,  than  of  asking  congress  to  regu- 
late the  price  of  wheat,  corn  and  cotton.  No 
nation  would  ever  abandon  a  system  that  works 
perfectly,  makes  manipulation  by  special  inter- 
ests and  dishonest  officials  impossible,  and  as- 
sures equity  to  all  so  far  as  equity  depends  upon 


THE  PEACEFUL  SOLUTION      93 

the  money  system,  and  never  breaks  down.  Is 
it  conceivable  that  a  system  under  which  no 
panic  could  ever  occur,  except  the  panic  of  in- 
dividual plungers,  could  be  abandoned?  Could 
it  be  abandoned  to  resume  one  under  which 
panics  are  periodical?  It  is  unthinkable ! 

While  I  do  not  believe  there  is  now  any  dan- 
ger of  debasement  of  the  currency  by  legisla- 
tion, it  is  constantly  being  debased  by  the  enor- 
mous production  of  gold,  and  we  all  know  that 
manipulation  by  means  of  cunningly  devised 
laws,  the  purpose  of  which  (unknown  perhaps 
to  the  legislators)  is  to  concentrate  credits,  is 
a  menace  scarcely  possible  to  over-estimate. 

Even  now  it  is  believed  by  many  that  such  a 
movement  is  afoot,  and  that  its  adoption  is 
possible,  not  because  it  is  considered  safe,  but 
because  the  present  situation  is  intolerable.  In- 
dependently of  official  sanction,  or  rather  I 
should  say,  independently  of  legislation,  the  in- 
terests have  already  appropriated  in  large  meas- 
ure the  issuance  of  credit,  and  in  the  National 
Reserve  Association  bill,  are  suspected  of  seek- 
ing official  recognition  of  their  "dominance  of 
the  sea  of  Volume."  Even  now  they  are  said 
to  have  the  power  of  life  and  death  over  all 
large  enterprises  requiring  bank  accommodation 
to  the  extent  of  a  million  or  two  millions  of  dol- 
lars, or  desiring  to  market  a  few  million  dollars 
of  bonds.  It  is  not  a  question  of  the  merit  of 


94  NATURAL  MONEY 

an  enterprise,  but  a  question  as  to  the  friendli- 
ness or  unfriendliness  of  those  who  dominate 
the  issue  of  credits. 

The  contest  between  President  Jackson  and 
the  National  Bank  nearly  eighty  years  ago  is  a 
well  known  instance  of  attempt  to  coerce  the 
government.  It  failed  because  Andrew  Jack- 
son was  President.  Now  we  have  a  stronger 
interest  which  is  suspected  of  working  to  ac- 
complish what  Biddle  and  his  associates  failed 
to  accomplish — and  there  is  no  Jackson  in  the 
White  House  to  foil  them. 

Is  it  conceivable  that  a  people  would  abandon 
that  system  of  money  which  is  an  assurance  to 
every  man  of  an  opportunity  to  work  at  a  liv- 
ing wage  in  case  of  loss  of  employment? 

Is  it  conceivable  that  the  plain  people  who 
work  for  wages  would  ever  consent  to  a  "lock- 
out" of  the  public  employment  workers  and 
thus  increase  the  competition  for  private  em- 
ployment? 

Is  it  conceivable  that  a  people  who  had  real- 
ized a  part  of  the  public  benefits  such  system 
would  bring — highways,  drainage,  irrigation, 
telephones,  electric  light  and  power  systems, 
and  vast  improvements  in  all  we  now  have  of 
other  public  utilities  and  schools,  and  steady  and 
increased  wages  to  privately  employed  labor — 
is  it  conceivable  they  would  consent  to  abandon 
the  great  works  before  completion,  allow  them 


THE  PEACEFUL  SOLUTION      95 

to  fall  into  ruin,  and  go  back  to  a  system  guar- 
anteed to  bring  the  rigors  every  fifteen  or  twen- 
ty years,  with  soup  houses  and  bread-lines  for 
honest  workers! 

It  would  be  as  reasonable  to  suppose  that 
the  people  of  a  malarial  country  made  healthful 
by  drainage  would  destroy  the  system  that  had 
brought  them  health. 


XI 

REDEMPTION". 

EJECTION  is  always  made  to  an  incon- 
vertible  currency  by  the  advocates  of  coin 
that  it  has  no  intrinsic  value  (meaning  that  it 
has  no  value  in  its  material)  and  that  it  must 
therefore  be  redeemed;  that  this  is  a  fatal  weak- 
ness. 

The  objection  is  not  properly  stated.  The 
real  criticism  is  that  the  money  may  come  to 
have  less  value  than  formerly  and  thus  work 
inequity.  (Of  course  it  might  suddenly  increase 
in  value  and  thus  work  inequity  to  debtors,  but 
this  is  not  usually  the  case  and  is  not  the  ground 
of  the  objection.)  The  same  objection  holds 
with  reference  to  gold,  but  not  to  the  same  de- 
gree. It  is  constantly  decreasing  in  value,  prob- 
ably having  lost  50  per  cent,  in  a  little  over 
sixty  years,  and  almost  certainly  having  lost 
60  per  cent,  in  the  last  three  centuries.  It  is 
therefore  not  "redeemed  in  exchange"  at  a  uni- 
form average  ratio  to  things  in  general,  The 
real  objection  is  against  any  money,  coin  or  in- 
convertible, that  is  deficient  in  constancy  of 
value. 

The  only  advantage  of  a  coin  currency  as  to 
redemption  is  that  in  the  event  of  a  collapse  of 


THE  PEACEFUL  SOLUTION      97 

the  government  the  small  amount  of  coin  each 
person  may  have  in  actual  possession  will  be 
saved.  But  this  amount  is  trivial  for  the  aver- 
age person  and  is  not  really  a  factor.  As  for 
gold  obligations,  they  are  no  better  than  others 
if  they  fail.  If  the  government  fails  its  gold 
bonds  will  not  be  paid  unless  by  the  succeeding 
government,  and  if  this  succeeding  government 
would  pay  the  gold  bonds  it  would  continue 
the  proposed  system  in  force  if  it  found  it  in 
force. 

But  the  contention  for  coin  money  "lest  the 
government  fail"  is  not  sound  as  against  a  self- 
regulating  inconvertible.  The  real  fear  is  not 
of  the  government's  ability  to  maintain  the  value 
of  the  proper  volume  of  currency,  but  arises  out 
of  the  acknowledged  fact  that  no  government 
(nor  all  governments  together)  can  maintain 
constancy  of  value  when  the  volume  is  greater 
or  less  than  the  demands  of  trade. 

That  there  is  no  fear  of  government  failure 
other  than  this  failure  to  do  the  impossible  is 
shown  by  the  fact  that  at  every  opportunity 
government  bonds  are  accepted  at  a  low  rate 
of  interest,  and  the  longer  they  run  the  lower 
the  rate  of  interest  at  which  they  will  float.  It 
follows,  then,  that  when  we  have  an  inconverti- 
ble that  is  self -regulating  and  of  constant  value, 
the  only  possible  ground  of  fear  will  be  the  total 


98  NATURAL  MONEY 

failure  or  complete  overthrow  of  the  govern- 
ment. 

It  would  be  well  for  the  reassurance  of  those 
who  are  troubled  by  such  a  fear  if  some  econom- 
ic actuary  would  make  a  table  giving  the  "ex- 
pectancy of  life"  of  nations  of  all  ranks.  They 
could  then  have  their  bond  purchases  under- 
written by  the  combinations  that  are  accredited 
with  giving  advice  (and  sometimes  orders)  to 
our  government  officials.  Assuming  a  thousand 
years  as  a  reasonable  expectancy  for  a  great 
nation,  the  present  value  of  the  principal  of  a 
$1,000.00  bond  is  something  more  than  one- 
fourth  of  one  billionth  of  a  dollar,  one  forty  mil- 
lionth of  one  cent. 

So  the  final  redemption,  the  value  of  the  ma- 
terial in  the  dollar,  to  be  realized  at  the  wind-up, 
is  no  value  at  all.  There  is  no  ground  to  dis- 
count the  properly  regulated  money  of  a  great 
nation,  but  we  may  well  distrust,  and  ought  to 
discontinue  the  use  of  money  subject  to  expan- 
sion and  contraction  by  statute,  as  congress  may 
be  induced  or  coerced  into  doing;  that  may  be 
affected  even  by  the  act  of  the  Secretary  of  the 
Treasury,  and  that  is  constantly  depreciating 
in  value  because  of  the  discovery  of  more  pro- 
ductive mines  or  the  invention  of  improved 
methods  of  extracting  the  money  material.  The 
great  nations  of  the  world  are  resting  upon  a 
worse  than  gambling  chance  when  it  would  be 


THE  PEACEFUL  SOLUTION      99 

easy  to  rest  upon  certainty  and  have  a  money  far 
superior  to  gold  even  if  gold  could  be  relieved 
of  the  fluctuations  due  to  the  rapid  increase  of 
supply  and  its  withdrawal  in  time  of  stress. 

We  do  not  want  a  money  whose  merit  is  made 
up  in  any  degree  of  prospective  salvage  at  the 
final  wind-up.  A  government  should  not  pro- 
vide for  its  own  failure.  The  present  value  of 
our  gold  currency,  counting  it  as  two  billion 
dollars,  and  the  wind-up  as  one  thousand  years 
hence,  is  less  than  the  price  of  a  postage  stamp. 

The  ideal  money  is  redeemed  by  service.  It- 
is  because  all  the  individuals  of  a  nation  owe 
sendee  to  the  government  and  because  the  sur- 
render of  the  currency  cancels  that  service,  that 
they  receive  it  in  exchange  for  goods.  The  last 
person  who  gives  service  or  goods  in  exchange 
for  such  money,  and  then,  instead  of  having  it 
redeemed  again,  turns  it  in  to  pay  his  taxes, 
has  given  it  its  final  redemption.  It  is  not  the 
function  of  government  to  redeem  money.  The 
money  is  not  a  government  debt,  but  the  govern- 
ment's receipt  for  a  debt  paid,  and  there  is  no 
obligation  on  the  part  of  the  government  ex- 
cept to  acknowledge  it  as  such  receipt  and  re- 
ceive it  in  lieu  of  service. 

It  may  be  well  merely  as  a  matter  of  form  to 
issue  these  certificates  specifically  as  title  deeds 
or  certificates  of  ownership  in  all  public  prop- 
erty, including  the  land;  an  undivided  interest. 


100  NATURAL  MONEY 

This  is  the  effect  whether  it  be  so  stated  or  not, 
but  if  it  were  so  stated  and  understood  by  all 
the  world,  even  were  the  government  overturned 
by  an  invader  and  a  new  government  set  up, 
the  money  system  could  not  be  superseded  ex- 
cept by  such  impolitic  procedure  as  no  conquer- 
or could  afford  to  adopt.  Suppose  the  certifi- 
cates had  printed  upon  them:  "Receivable  for 
all  government  dues."  This  would  make  them 
title  to  the  use  of  land  until  they  were  redeemed 
by  the  rental  value. 

And  why  should  even  a  conquering  invader 
wish  to  change  such  a  system?  It  would  be  a 
difficult  and  expensive  change  without  any  ac- 
cruing benefits;  in  fact,  only  loss.  It  would 
make  the  raising  of  a  revenue  more  difficult,  re- 
duce the  amount  of  it  and  insure  the  downfall 
of  the  new  government. 

It  could  not  happen.  Whatever  may  have 
been  the  case  heretofore,  this  is  now  true,  that 
such  fear  as  may  exist  of  government  failure 
and  consequent  failure  of  redemption,  exists 
solely  and  only  because,  under  the  present  mone- 
tary systems  and  the  universal  policy  of  bond 
issues,  governments  may  obligate  themselves  to 
the  point  of  insolvency.  Under  the  proposed 
system  this  cannot  be  done.  The  government 
will  never  issue  bonds,  and  the  only  liability  on 
the  currency  is  to  receive  it  in  lieu  of  service 
due  (taxes).  Under  present  systems  of  money, 


THE  PEACEFUL  SOLUTION    101 

governments  not  only  go  into  debt,  but  the 
great  nations  have  no  restraint,  rather  are  en- 
couraged by  the  so-called  interests  to  incur 
heavy  obligations  in  order  that  the  bonds  may 
be  had  for  investment.  Under  the  proposed 
system  all  interest  charges  against  the  govern- 
ment are  eliminated  and  the  burden  of  all  ex- 
penses, regular  or  extraordinary,  is  distributed 
with  exact  justice  through  the  reduced  purchas- 
ing power  of  all  the  money  in  circulation;  that 
is,  through  higher  prices,  yet  it  remains  the 
measure  of  a  common-labor  day.  And  where- 
as the  purchasing  power  of  this  money  will  fall 
where  more  than  the  normal  force  (as  in  war) 
are  in  public  employment,  the  fall  will  be  ex- 
actly proportioned  to  the  shift  of  activity,  as  it 
should  be,  and  its  return  to  normal  purchasing 
power  will  be  exactly  proportioned  to  the  re- 
turn of  activity  to  private  productive  enterpris- 
es, also  as  it  should  be,  for  when  the  quantity 
of  money  increases  and  the  production  of  con- 
sumption goods  decreases,  each  person  in  the 
community  must  be  content  with  less  than  his 
accustomed  portion  or  must  spend  more  hours 
per  day  in  productive  activity.  It  should  be 
mentioned  that  the  widespread  tendency  to  do 
this  is  a  check  on  advance  of  prices,  and  to  the 
extent  it  is  practiced  measures  the  extent  to 
which  the  people  are  paying  as  they  go.  Under 
our  present  system  interest-bearing  bonds  are 


102  NATURAL  MONEY 

issued,  and  this  not  only  affords  opportunity 
for  speculation  and  sharp  practice,  but  their 
value  depends  upon  the  opinions  of  money  lend- 
ers who  are  interested  to  get  them  at  the  low- 
est possible  price,  whereas  the  value  of  the  new 
system  money  issued  for  extraordinary  expense 
is  fixed  as  the  prices  of  all  things  in  the  general 
market  are  fixed,  by  all  the  influences  that  op- 
erate in  the  economic  body  and  without  any 
suspicion  or  possibility  of  unfairness  or  trick- 
ery. 

I  have  said  of  this  money  that  every  unit  is 
born  free;  issues  in  payment  of  service  volun- 
tarily rendered.  It  is  significant,  therefore,  to 
note  Nature's  beautiful  provision  for  putting  to 
death  every  baseborn  dollar  that  makes  its  ap- 
pearance; that  is,  every  dollar  that  is  the  is- 
sue of  enforced  (unfree  or  involuntary)  labor. 
Its  presence  is  tolerated  in  circulation  only  for 
a  short  time.  Its  influence  is  corrupting,  poi- 
sonous, and  it  will  soon  be  sent  to  execution  by 
cancellation. 

To  illustrate  still  further  the  only  real  re- 
demption about  which  we  need  be  at  all  con- 
cerned, let  us  make  a  diagram  representing  our 
colony  in  different  stages  of  its  development. 
In  the  first  stage  let  us  suppose  that  10  per  cent, 
of  the  productive  workers  are  in  the  public 
service.  Taxes  are  1-10,  or  30  days. 


THE  PEACEFUL  SOLUTION     103 


Public  I  These  100  men  in  the 
I  public  service  are  entitled 
to  one-tenth  of  all  the 
"things  to  use,"  assuming,  for 
convenience,  uniform  efficiency, 
but  as  they  are  engaged  in 
making  something  for  common  use  by  all  the 
people,  they  must  get  their  real  pay  from  the 
900  who  are  making  the  things  to  be  used 
by  individuals.  The  equity  of  the  situation  is 
the  same  as  if  things  were  owned  in  common, 
except  that  the  more  efficient  workers  get  the 
benefit  of  their  greater  efficiency.  The  certificates 
the  public  workers  get  are  therefore  mere  titles 
to  their  share  of  the  "things  to  use,"  and  as  they 
produce  60,000  of  them  if  they  work  300  days 
each,  during  the  year,  with  6,000  of  which  they 
must  pay  their  own  taxes,  the  total  value  of  the 
privately  produced  goods  is  $540,000.  The  900 
people  with  their  private  products  are  the  only 
ones  to  redeem  the  certificates  (money)  because 
those  men  in  continuous  public  service  were 
working  out  the  time  due  from  the  others  as 
well  as  their  own  time. 

If  we  express  the  production  of  the  private 
workers  in  terms  of  wheat  bushels  it  will  be  easy 
to  see  what  the  price  of  wheat  will  be.  Sup- 
pose they  produce  810,000  bushels  of  wheat.  The 
public  service  workers  must  be  able  to  buy  81,000 
bushels  of  it  for  $54,000,  which  is  66  2-3  cents 


104  NATURAL  MONEY 

the  bushel.  As  each  man  raised  900  bushels, 
and  it  was  worth  66  2-3  cents  the  bushel,  the  pri- 
vate workers  earned  $600  a  year  each — the  same 
as  those  in  the  public  service,  or  $540  over  and 
above  taxes. 

At  a  later  stage  20  per  cent,  of  the  people 
will  be  in  the  public  service,  not  because  80  per 
cent,  can  produce  as  much  as  90  per  cent,  for- 
merly did,  but  because  they  can  produce  a  great 
deal  more.  Not  all  the  labor  set  free  from 
maintaining  the  status  quo  goes  into  public 
service.  Probably  half  of  it  goes  to  advancing 
the  status  quo  in  privately  owned  production, 
but  now  the  diagram  will  be: 

Those  in  public  service 
now  cause  to  issue  $120,- 
000  in  certificates,  but 
must  use  one-fifth  of 
these,  $24,000,  to  pay  their  own 
taxes,  taxes  being  now  dou- 
bled, so  now  we  have  twice 
as  large  a  volume  of  currency  with  which  to 
exchange  goods  privately  produced.  There  will 
be  $96,000  with  which  to  buy  one-fifth  of  the 
"things  to  use."  But  each  dollar  must  buy  more 
than  formerly,  for  real  wages  have  increased 
while  the  money  wage  has  remained  unchanged. 
We  will  assume  therefore  that  instead  of  pro- 
ducing 810,000  wheat  bushels  of  "things  to  use" 
the  80  per  cent,  of  population  produces  960,000 


PRIVATE 

WORKERS 


PUBLIC 
WORKERS 


THE  PEACEFUL  SOLUTION    105 

wheat  bushels  of  things.  Now  the  public  ser- 
vice workers  must  be  able  to  buy  one-fifth  of  it 
with  $96,000;  that  is,  192,000  bushels  at  50  cents 
the  bushel,  so  each  worker  now  is  able  to  pur- 
chase 960  bushels  of  wheat  with  $480.00  left 
after  paying  his  taxes,  whereas  previously  he 
could  buy  only  810  bushels  with  the  $540.00  left 
after  paying  his  taxes. 

Thus  we  see  the  volume  of  money  has  dou- 
bled, but  its  purchasing  power  has  increased. 
Yet  the  total  production  did  not  double.  It  in- 
creased only  from  810,000  to  960,000  wheat 
bushels  of  consumption  goods,  but  the  larger 
total  of  consumption  goods  was  produced  by  a 
smaller  number  of  workers  and  everybody  en- 
joyed an  advance  of  wages.  To  state  it  differ- 
ently, twice  as  much  money,  with  a  little  less 
than  20  per  cent,  more  of  goods  to  exchange, 
and  twice  the  amount  of  taxes  to  pay,  enjoys  an 
increase  of  33  1-3  per  cent,  in  purchasing  power 
— buys  four  bushels  of  wheat  where  it  formerly 
bought  three. 

Of  course  the  foregoing  figures  are  merely 
for  illustration.  People  will  not  pay  taxes  but 
ground  rent  (those  who  use  the  ground).  What 
percentage  of  labor  will  go  into  public  service 
need  not  give  us  any  concern,  for  as  it  will  go 
there  because  it  is  not  required  in  private  en- 
terprise it  will  be  so  much  energy  saved  as 
compared  with  allowing  it  to  be  wasted  in  idle- 


106  NATURAL  MONEY 

ness,  and  in  any  event  it  will  be  much  better 
for  privately  employed  labor  to  have  these  men 
engaged  in  public  work  than  to  have  them  com- 
peting for  the  places  of  privately  employed 
laborers  and  forcing  wages  down. 

The  purchasing  power  of  the  money  cannot 
go  down  except  as  real  wages  fall  (real  wages 
being  what  the  money  wage  will  buy),  and  this 
can  happen  only  as  prices  go  up.  The  real 
wage  cannot  go  down  in  private  employment 
under  increasing  production  except  as  the  labor- 
er is  forced  to  give  up  out  of  his  private  pro- 
duction more  than  the  increase  of  production. 
This  can  be  done  only  by  levying  tribute  upon 
him  such  that  he  cannot  escape  it.  It  cannot 
be  taxes  (the  money  issue),  for  though  the 
taxes  are  larger,  we  have  seen  that  more  per- 
sons go  into  public  service  at  the  later  period 
because  the  smaller  number  then  in  private  em- 
ployment can  produce  more  than  formerly  could 
be  produced  by  the  larger  number  of  private 
workers.  The  only  other  power  that  can  take 
from  him  a  part  of  his  product  is  some  person 
to  whom  he  occupies  the  relation  of  serf,  slave 
or  tenant. 

As  we  never  had  serfs,  and  no  longer  have 
slaves,  it  will  be  the  landlord  who  takes  it  if  the 
laborer  should  prove  unable  to  retain  it  all.  But 
even  so,  the  laborer  will  still  be  able  to  get  the 
minimum  wage  and  not  be  forced  into  the  bread- 


THE  PEACEFUL  SOLUTION    107 

line,  and  the  money  will  continue  to  be  redeemed 
at  par  in  the  things  that  constitute  the  real  wage 
of  a  common  labor  day. 

Under  this  system  more  money  would  con- 
stantly be  used  because  of  a  nearer  and  nearer 
approach  to  a  strictly  cash  basis,  wherefore  its 
purchasing  power  would  not  fall  in  proportion 
to  the  increase  of  volume  per  capita;  not  even 
as  the  volume  increases  in  ratio  to  the  business 
to  be  transacted,  for  a  cash  basis  requires  much 
more  money  for  a  given  volume  of  business. 

This,  however,  is  clear,  that  the  increase  of 
privately  produced  wealth  must  appear  as 
wages  except  such  as  goes  to  capital  as  interest 
or  to  the  landlord  as  ground  rent.  There  is  no 
other  place  for  it  to  go.  We  do  not  have  to 
deduct  even  taxes,  for  we  are  considering  the 
increase  of  privately  produced  wealth. 

Interest  is  earned  by  the  individual  who  loans 
his  surplus  and  need  not  be  discussed  further 
than  to  say  that  in  free  conditions  the  interest 
rate  tends  always  to  decrease,  but  where  we  have 
monopoly  the  interest  rate  will  be  as  high  as 
can  be  realized  by  investing  in  monopoly. 

Wages,  of  course,  are  earned,  and  each  one 
of  the  800  privately  engaged  workers  in  our  col- 
ony will  give  the  product  of  a  minimum  labor 
day  for  two  of  the  certificates  with  which  to  get 
money  to  pay  his  taxes — the  product  of  sixty 
days  for  enough  of  them  to  settle  his  entire  ob- 


108  NATURAL  MOXEY 

ligation  to  the  state.  And  the  amount  they 
must  buy  is  exactly  equal  to  what  the  public 
workers  have  to  sell. 

The  800  private  workers  produced  960,000 
wheat  bushels  of  wealth;  1,200  wheat  bushels  of 
wealth  each,  assuming  equal  production  for  all 
workers. 

But  suppose  an  individual  had  a  piece  of 
parchment  declaring  him  the  owner  of  the  land, 
and  they  were  obliged  to  give  him  one-third 
the  crop  for  the  right  to  use  the  land.  If  this 
were  the  case  320,000  wheat  bushels  of  the 
wealth  would  go  into  the  landlord's  bins,  and 
there  would  be  but  640  wheat  bushels  of  wealth 
each  for  the  workers,  instead  of  960;  that  is,  the 
money  would  be  redeemed  in  wheat  bushels  at 
75  cents. 

But  unless  shipped  away  the  320,000  wheat 
bushels  of  wealth  will  be  offered  for  sale  in  com- 
petition with  all  the  other  wealth,  for  the  land- 
lord cannot  use  it  all.  This  will  demoralize 
prices  and  if  there  is  any  wise  counselor  in  the 
colony  of  the  near-statesman  variety  he  will  ex- 
plain the  difficulty  as  the  result  of  "over-produc- 
tion." 

Let  us  recapitulate: 

Workers  go  into  the  public  service  because, 
by  reason  of  slightly  increased  purchasing 
power  in  money,  private  enterprises  do  not  em- 
ploy all  the  labor  open  to  engagement. 


THE  PEACEFUL  SOLUTION    109 

Workers  leave  the  public  service  because,  by 
reason  of  a  slight  decrease  in  purchasing  power 
of  money  (increase  of  prices)  private  employ- 
ers offer  a  slight  increase.  The  vibration  of 
prices  is  always  such  as  to  correct  the  volume 
of  currency  and  insure  permanent  correspond- 
ence between  the  money  supply  and  the  demands 
of  trade. 


xn 
LEGAL  TENDER 

TT  was  Herbert  Spencer's  contention  that  in- 
dividuals  should  issue  money,  but  if  he  had 
seen  that  the  receipts  for  communal  service 
were  the  best  money  possible  to  have,  that  such 
money  would  automatically  regulate  its  volume 
and  value,  he  would  doubtless  have  pronounced 
it  the  natural  money  and  have  likened  it  to  the 
blood  of  the  physical  organism  which  flows  to 
the  part  where  it  is  needed  in  the  quantity  de- 
manded (within  the  limits)  to  perform  the  re- 
quired work.  He  might  have  carried  the  simile 
further  and  have  said:  As  in  the  blood,  when 
each  particle  has  done  its  work  it  is  eliminated, 
so  in  this  money  system,  each  particle  is  elim- 
inated (canceled)  when  its  work  is  done,  and 
if  it  were  not  it  would  corrupt  and  poison  the 
system. 

And  I  am  very  sure  he  would  specially  have 
dwelt  upon  the  fact  that  in  this  system  no  dollar 
can  issue  except  some  individual  or  company 
render  service  to  make  its  birth  legitimate. 

With  the  system  he  proposed  the  community 
would  not  only  be  dependent  upon  the  integ- 
rity of  individuals,  but  as  individuals  are  short- 
no 


THE  PEACEFUL  SOLUTION    111 

lived,  the  money  issue  must  soon  be  in  new 
hands  and  subject  to  vicissitudes. 

Governments,  too,  are  subject  to  vicissitudes, 
but  only  to  such  as  befall  a  whole  people,  and 
this  chance  we  must  take,  and,  as  we  have  seen, 
if  the  government  fails  it  fails  to  pay  gold  and 
silver  bonds.  The  only  possible  advantage  then 
to  the  people  at  large  would  be  as  to  the  small 
amount  of  money  in  hand — a  few  dollars  for 
the  average  person.  Spencer  had  doubtless  only 
coin  in  mind. 

If  it  is  the  proper  function  of  the  govern- 
ment to  issue  money  upon  the  request  of  the  in- 
dividual who  has  performed  his  part,  then  it  is 
right  for  the  government  to  issue  all  the  money 
on  the  same  terms  to  all  persons  who  meet  the 
conditions,  for  that  which  the  government  should 
do  the  individual  ought  not  to  be  forced  to  do 
nor  allowed  to  do.  In  their  money  people 
ought  not  to  be  hampered  by  being  obliged  to 
inquire  as  to  anything  except  "is  it  money?" 
ought  not  to  be  put  upon  their  inquiry  as  to 
its  value.  If  individuals  are  allowed  to  issue 
money  there  may  be  a  thousand  different  de- 
signs, all  of  which  it  would  be  possible  only  for 
an  expert  to  know. 

It  therefore  seems  conclusive  that  the  govern- 
ment should  issue  the  money  and  that  it  should 
be  the  counterpart  of  all  public  service  and 
products  of  such  service,  the  expression  of  the 


112  NATURAL  MONEY 

government's  share,  which  no  man  can  appro- 
priate and  which  even  a  conqueror  cannot  carry 
away. 

The  money  is  title  to  an  undivided  interest  in 
all  public  utilities  and  benefits. 

And  this  title  runs  with  the  land,  because  it 
was,  or  should  have  been,  paid  out  of  land  value. 

If  the  government  ought  to  issue  the  money  it 
should  define  its  status,  and  most  or  all  govern- 
ments do  this  by  proclaiming  the  currency  of 
the  realm  "legal  tender,"  the  meaning  of  which 
is  that  if  an  individual  be  indebted  to  another, 
in  general  terms;  that  is  to  say,  owe  him  a  pay- 
ment expressed  in  the  generic  term  of  "value," 
he  may  discharge  the  debt  with  the  legal  tender 
of  the  realm. 

This  is  only  to  say  that  if  any  man  invoke 
the  aid  of  the  government  for  general  recovery 
against  another,  he  cannot  demand  any  of  the 
thousands  of  things  that  constitute  property, 
but  must  accept  the  generic  expression  of  value, 
known  as  money. 

This  is  a  reasonable  provision,  for  if  a  suc- 
cessful litigant  do  not  accept  money  in  payment 
what  shall  he  take,  and  who  shall  determine? 
Money  is  in  fact  everything,  with  the  option  of 
selection,  wherefore,  in  normal  conditions,  the 
man  who  is  paid  in  money  is  paid  in  everything 
and  anything. 

But  is  it  necessary  or  even  advisable  to  make 


THE  PEACEFUL  SOLUTION     113 

a  legal  tender?  Is  it  a  necessary  function  of 
money? 

It  is  necessary  that  money  be  practically  a 
legal  tender,  whether  it  is  in  law  or  not.  It 
must  be  commonly  accepted  in  order  to  perform 
the  function  of  exchange,  and  ought  to  be  the 
only  medium  of  exchange  in  order  to  avoid  con- 
fusion and  loss  of  time.  Such  medium  of  ex- 
change is  practically  a  legal  tender  whether 
technically  so  or  not,  and  if  to  this  we  add  by 
statute  or  the  custom  of  courts  the  refusal  to 
render  judgments  for  general  recovery  in  any 
other  terms  than  money,  it  becomes  a  legal  ten- 
der in  the  fullest  sense. 

If,  in  addition  to  this,  it  is  made  receivable  in 
lieu  of  all  obligations  to  the  government,  it  be- 
comes all  that  any  legal  tender  should  be — all 
that  it  can  be,  for  everybody  will  take  it  at  what 
it  is  worth  and  nobody  should  be  forced  to  re- 
ceive it  for  more  than  it  is  worth. 

And  again,  as  to  more  definite  expression  on 
the  subject  of  legal  tender,  my  conclusions  are: 

It  is  a  proper  function  of  government  to 
give  to  individuals  who  perform  government 
service  a  certificate  of  title  to  their  undivided 
interest  in  pubic  benefits. 

These  certificates,  if  in  convenient  form,  will 
be  the  money  of  the  realm  with  or  without  de- 
cree. 

If  general  recovery  is  rendered  only  in  terms 


114  NATURAL  MONEY 

of  these  certificates,  they  will  be  legal  tender, 
and 

If  the  government  promises  to  receive  them  in 
satisfaction  of  all  dues  to  the  government,  this 
is  the  only  guaranty  the  government  can  prop- 
erly give,  and  anything  more  is  in  the  nature  of 
a  boasting  cheat. 


XIII 

THE   STREAM   OF   CURRENCY 

A  SIDE  from  the  money  exchanged  for  coin, 
•*•  it  is  evident  the  total  volume  at  any  given 
time  will  be  the  previous  cost  of  government 
and  public  works  less  the  cancellations  by  pay- 
ment of  taxes  and  accidental  losses.  Just  now 
we  will  not  concern  ourselves  about  the  volume 
of  currency  circulating,  the  reservoir  or  sea  of 
fluid  credit,  but  take  a  view  of  the  stream  that 
is  to  feed  this  sea;  trace  it  to  its  headwaters  and 
discover  whether  it  is  a  living  stream  or  one 
that  is  going  to  run  dry,  for  our  system,  if  it 
is  to  be  the  ideal  one,  must  be  a  permanent  sys- 
tem; not  one  that  will  serve  for  a  century  or 
two,  but  for  all  time — at  least  so  long  as  the 
distinction  of  "mine"  and  "thine"  continues. 
This  may  seem  like  looking  far  ahead;  taking 
care  of  posterity,  as  it  were.  It  is.  But  if 
Cheops  needed  a  firm  foundation,  so,  too,  does 
our  monetary  system.  If  we  meet  the  situation 
we  shall  lay  "great  bases  for  eternity,"  that  "all 
alone  stand  hugely  politic,"  which  shall  outlast 
crumbling  stone  and  be  a  monument  to  justice 
between  man  and  man  as  long  as  the  world 
lasts — at  least  until  we  shall  have  achieved  the 
Greater  Redemption  and  proved  that  the  primal 

115 


116  NATURAL  MONEY 

curse  of  ejectment  concealed  the  key  with  which 
we  open  the  gate  of  the  Greater  Eden. 

There  need  be  no  fear  for  the  supply  of  our 
new  money,  at  least  for  the  near  future,  for  the 
outlet  will  be  abundant  until  we  shall  have 
transformed  the  face  of  the  earth.  We  shall 
need  all  the  energy  that  can  be  spared  from 
maintaining  and  advancing  the  status  quo,  and 
as  the  productiveness  of  labor  will  increase  by 
marvelous  strides  in  every  line,  it  is  self-evident 
the  "free  labor"  will  be  an  enormous  and  ever 
increasing  amount.  I  may  as  well  say  now  that 
within  two  or  three  hundred  years  of  the  in- 
auguration of  economic  justice,  as  nearly  as  we 
now  know  how  to  be  just,  we  shall  spend 
through  the  agencies  of  government  not  less 
than  $600,000,000,000!  Yes,  six  hundred  bil- 
lions of  dollars — nearly  one  hundred  and  twen- 
ty-five times  the  Federal  cost  of  the  war  be- 
tween the  states.  (I  think  it  will  be  nearer  a 
thousand  billions,  but  desire  to  be  conservative.) 
This  is  a  tidy  sum,  but  we  shall  have  it  to  spend. 
Not  only  shall  we  have  it  to  spend,  but  it  will 
not  even  be  a  burden  on  any  one.  All  public 
works  pay  for  themselves  within  a  very  few 
years  by  the  saving  of  energy  otherwise  wasted. 

For  instance,  we  need  at  least  two  million 
miles  of  highway,  the  finished  cost  of  which  will 
not  be  less  than  $10,000  the  mile.  This  will 
provide  for  twenty  billions  of  issue,  and  we  need 


THE  PEACEFUL  SOLUTION     117 

even  larger  amounts  each  for  drainage  and  irri- 
gation, which  will  include  provision  for  power. 
We  must  prepare  ultimately  to  feed  400,000,- 
000  people  in  the  United  States.  We  will  con- 
serve the  water  where  it  falls  and  use  it  both  for 
power  and  irrigation,  and  the  irrigating  system 
will  be  also  the  drainage  system,  at  least  in  large 
part.  When  we  have  from  two  to  four  hundred 
million  horse  power  from  the  rainfall,  and  mul- 
tiply our  possible  agricultural  production  sev- 
eral fold,  the  energy  freed  for  still  further 
public  work  will  be  almost  incalculable,  and 
soon  after  these,  with  other  public  utilities,  are 
extended  and  expanded,  we  shall  have  so  much 
energy  set  free  from  necessity  that  even  the 
houses  will  be  largely  built  and  furnished  by  the 
local  communities;  to  let  for  a  day,  a  week,  or 
as  long  as  wanted  at  a  moderate  charge. 

Such  houses  as  we  shall  build  will  cost  an 
average  of  $10,000,  and  if  we  have  forty  mil- 
lions of  them  for  two  hundred  millions  of  peo- 
ple, this  will  be  four  hundred  billions  of  dollars 
additional. 

And  such  roads,  such  irrigating  and  drainage 
and  power  systems!  Think  of  two  million  miles 
of  boulevard,  with  electric  lights  that  are  auto- 
matically turned  on  ahead  and  off  behind  as  you 
speed  along  in  your  auto!  Telegraph,  tele- 
phone and  postal  systems  on  a  like  scale! 

There  need  be  no  fear  of  an  outlet  for  the 


118  NATURAL  MONEY 

currency  until  all  these  great  works  shall  have 
been  accomplished. 

But  even  if  all  this  be  granted  it  may  be  con- 
tended there  will  come  a  time  when,  aU  the  im- 
provements completed  and  nothing  but  repair 
and  the  ordinary  administrative  expenses 
(which  will  then  be  light) ,  there  will  be  no  door 
of  issue,  at  least  not  for  sufficient  volume. 

It  may  happen  that  a  time  will  come  when 
little  in  the  way  of  utilitarian  work  will  remain 
beyond  repair,  but  I  do  not  see  how  a  people 
who  are  constantly  growing  intellectually,  ethic- 
ally and  esthetically  can  possibly  forestall  them- 
selves. Evolution  always  preserves  the  balances. 

It  is  said  that  something  more  than  half  a 
century  ago  one  of  our  great  senators  (there 
were  a  number  of  great  ones  then),  speaking 
with  another,  commiserated  the  oncoming  gen- 
erations because  "all  the  great  questions  had 
been  settled"!  It  appears  to  me  his  thought 
was  not  more  ludicrously  absurd  than  the  one 
under  consideration,  yet,  as  the  question  trou- 
bled me  it  may  trouble  others.  For  this  reason 
I  have  considered  it  along  the  same  lines  my 
own  thought  followed,  almost  regardless  of 
unity  in  plan,  to  find  at  last  that  there  is  no  real 
difficulty. 

For  suppose  the  public  service  reduced  by 
half  or  even  by  three-quarters  from  the  highest 
amount  for  any  year.  It  will  simply  mean  that 


THE  PEACEFUL  SOLUTION    119 

man  has  grown  from  an  economic  pygmy  to  an 
economic  giant,  and  as  this  money  is  an  ex- 
pression of  manhood,  it  will  have  grown,  too. 
It  multiplies  by  section,  grows  by  way  of  the 
fourth  dimension;  the  cent  will  have  become  a 
dime,  the  dime  a  dollar,  not  in  name  but  in  pur- 
chasing power,  and  if  need  be  the  cent  can  be- 
come a  dollar.  Reduction  in  general  values  is 
exactly  the  same  as  multiplying  the  volume  of 
the  money.  Even  if  there  were  no  actual  in- 
crease of  the  issue,  to  double  production  would 
be  in  effect  to  double  the  currency  by  the  halv- 
ing of  prices. 

But  as  a  matter  of  fact  the  communal  or  gov- 
ernment work  would  never  be  such  that  fewer 
persons  would  be  engaged  in  it,  for  every  step 
of  advance  means  that  altruism  is  developing 
toward  parity  with  egoism. 

Now,  it  is  evident  that  when  altruism  equals 
egoism  there  can  be  no  private  property,  no  dis- 
tinction of  mine  and  thine;  and  while  I  do  not 
believe  humanity  will  attain  to  that  stage  so 
long  as  any  irksome  effort  is  necessary  to  life 
(at  least  there  will  be  no  irksome  labor  then),  I 
do  believe  that  altruism  will  equal  egoism  in  a 
constantly  widening  circle  of  associations  and 
with  reference  to  a  larger  and  larger  list  of 
material  things  now  the  subjects  of  private  own- 
ership. For  instance  I  believe  that  within  two 
hundred  years  of  the  time  when  economic  justice 


120  NATURAL  MONEY 

is  established,  the  distribution  of  population  will 
be  totally  different  from  what  it  now  is.  Con- 
gested cities  will  be  a  thing  of  the  past ;  a  night- 
mare dream  that  is  ended.  The  city  will  be  an 
almost  unbroken  line  winding  about  the  coun- 
try, or  a  succession  of  villages  or  towns,  almost 
contiguous,  intersected  at  intervals  by  the  rail- 
roads. The  industrial  centers  will  be  at  these 
intersections,  the  residences  being  reached  by 
electric  street  cars.  When  we  shall  have  attained 
to  this  stage  of  development  all  the  people  will 
join  in  growing  the  crops,  going  out  in  the 
spring  and  remaining  until  autumn,  when  they 
will  return  and  during  the  winter  half-year  be 
engaged  in  the  factories,  shops  and  offices.  This 
diversity  of  employment  will  do  away  with  nar- 
row and  narrowing  specialization  from  which  a 
large  part  of  the  people  now  suffer  because  they 
are  specialists  in  a  narrow  groove  all  the  time; 
and  contact  with  nature  and  nature's  processes 
each  year  from  childhood  to  old  age,  without 
loss  of  social  contact,  will  make  for  broad  and 
healthful  development.  There  will  be  no  loss 
from  lack  of  specialization,  because  the  all-round 
man  is  the  best  specialist  when  he  is  acting  as  a 
specialist.  He  brings  to  bear  a  broader  view 
and  combines  many  branches  of  knowledge,  the 
inter-relation  of  which  the  narrow  specialist  does 
not  suspect. 


THE  PEACEFUL  SOLUTION    121 

The  two  great  holidays  will  be  the  Hegira 
and  the  Harvest  Home. 

The  growing  will  be  done  by  the  communi- 
ties, all  who  take  part  (nearly  the  whole  popu- 
lation) receiving  certificates  in  payment.  A 
few  will,  of  course,  be  engaged  in  forms  of  em- 
ployment necessarily  continuous,  but  not  so  en- 
gaged every  year;  and  these  will  be  very  few, 
for  really  there  isn't  much  to  do  in  the  city  when 
the  people  are  all  away. 

The  reason  for  this  seeming  digression  is 
this: 

Whatever  the  community  does  as  a  com- 
munity,  engaging  individuals  to  perform  the 
work;  not  requiring  from  each  his  share  but 
leaving  it  to  voluntary  work  for  pay,  will  cause 
money  to  issue  as  a  result  of  industry  applied 
to  production  which  is  not  in  its  nature  of  a 
public  utility  character.  Doubtl^*-*  the  growing 
of  the  crops  would  alone  supply  a  sufficient 
currency,  but  this  is  not  important,  for  when 
subsistence  is  so  easily  and  certainly  provided, 
three-fourths  or  more  of  human  activity  will  be 
"free  labor"  and  available  for  any  sort  of  com- 
munity work  to  be  done.  There  will  be  scores 
or  hundreds  of  activities  suitable  to  be  carried 
on  by  the  communities  for  the  general  benefit, 
all  free  or  of  nominal  cost — theatres,  schools, 
lectures,  etc.,  etc. — the  expense  of  which  above 
nominal-charge  receipts  would  be  a  channel  of 


122  NATURAL  MONEY 

issue.  It  is  no  stretch  of  the  imagination  to  con- 
ceive in  such  a  community — I  mean  every  par- 
ticular community  of  such  a  society — operas, 
concerts,  lectures,  classes,  dramatic  perform- 
ances, etc.,  etc.,  every  night  during  the  city  life, 
on  such  scale  as  we  now  see  only  for  an  occa- 
sional season  in  the  great  cities  of  the  world, 
and  so  many  in  number  as  to  seat  half  the  popu- 
lation. As  conditions  now  are,  such  tilings  are 
not  accessible  to  more  than  ten  per  cent,  of  the 
population,  and  to  them  only  at  intervals  and  at 
a  cost  such  as  to  exclude  all  but  a  very  few. 
Under  the  conditions  which  will  prevail  when 
we  have  had  economic  justice  for  a  generation 
or  two  I  believe  that  20  per  cent,  of  the  popula- 
tion will  be  in  attendance  upon  some  form  of 
public  entertainment  or  meeting  every  day  or 
evening.  More  and  more  will  social  intercourse 
become  general;  castes  will  melt  away  and 
cliques  disappear.  Not  that  people  will  be  equal 
intellectually,  esthetically  or  morally,  but  that 
aloofness  will  have  come  to  be  recognized  as 
what  it  really  is,  timid  discretion  against  sub- 
mitting a  thin  veneer  to  contact  lest  it  be 
broken;  and  the  democracy  of  universal  broth- 
erhood recognized  as  the  only  aristocracy. 

To  one  who  knows  something  of  the  difficulty 
of  raising  revenue  there  is  at  least  some  com- 
fort in  looking  forward  to  conditions  in  which 
a  statesman  will  be  considered  great  in  proper- 


THE  PEACEFUL  SOLUTION    123 

tion  as  he  is  successful  in  finding  ways  in  which 
profitably  to  spend  the  revenue,  fields  into  which 
to  direct  the  "free  labor"  available,  not  to  win 
subsistence  (that  will  have  ceased  to  be  a  prob- 
lem) ,  but  for  the  still  further  uplift  of  human- 
ity. So  little  time  will  be  required  for  sub- 
sistence (not  more  than  one-quarter)  that  near- 
ly all  will  be  devoted  to  advancement. 


XIV 

VOLUME 

T  T AVING  explored  the  Amazon  of  supply 
let  us  now  explore  the  reservoir,  or  lake, 
or  sea  into  which  it  flows  and  see  what  we  can 
learn  of  its  magnitude.  In  economic  terminol- 
ogy this  sea  is  called  Volume.  It  is  the  amount 
of  flow  from  the  Amazonian  money  stream  that 
does  not  disappear  but  remains  to  float  the  com- 
merce of  the  people.  I  suspect  it  is  really  an 
ocean;  at  least  that  it  will  be  an  ocean,  on  which 
the  commerce  of  the  world  shall  ride  in  peace 
and  security,  with  never  a  financial  storm  to 
wreck  the  barks  afloat  on  its  bosom — when 
the  great  nations  shall  have  emerged  from  the 
economic  superstition  that  money  value  should 
be  in  the  money  material. 

What  will  the  volume  of  money  be  when  it 
shall  have  reached  the  limit;  that  is,  the  point 
where  cancellation  will  balance  issue?  Let  us 
assume  a  population  of  200  millions  and  that  in 
the  300  years  after  adopting  the  system  we  had 
spent  1200  billions  of  dollars  in  some  such  man- 
ner as  follows: 

124 


THE  PEACEFUL  SOLUTION    125 

Two  million  miles  of  highway 20  billions 

Later,  improved  by  being  widened,  beautified 

and  lighted  by  electricity   80  billions 

Rehabilitating  and   extending  railways 50  billions 

Underground  telegraphs,  telephones  and  tubes  50  billions 
Irrigation  and  drainage,  including  power,  uni- 
versal water  supply  and  canals 300  billions 

Three  hundred  years'  administration 300  billions 

Public  buildings  and  residences  for  200  mil- 
lions of  people    400  billions 


Total    1200  billions 

It  is  immaterial  whether  this  comes  about  in 
300  years  or  500  years,  the  only  question  being 
as  to  the  volume  required  by  the  demands  of 
trade;  that  is,  what  proportion  of  it  will  remain 
outstanding. 

It  is  a  universally  recognized  fact  that  except 
for  the  negligible  hoardings  of  misers  and  igno- 
rant people,  personal  savings  must  be  in  the 
form  of  land,  going  business,  permanent  im- 
provements or  credits.  Under  our  present  sys- 
tem these  savings  cannot  be  in  the  form  of 
money  except  by  incurring  the  annual  waste  of 
interest.  Whatever  be  the  ideal  condition,  sav- 
ings must  earn  interest  if  interest  prevails  be- 
cause every  one  who  labors  shares  the  burden  of 
interest  and  is  entitled  to  share  the  advantage. 
But  suppose  interest,  though  it  remained  as  to 
wealth,  did  not  attach  to  money  loans;  then 
savings  would  be  made,  to  a  considerable  extent 


126  NATURAL  MONEY 

at  least,  in  money.  That  wealth  should  earn  in- 
terest and  money  should  not  seems  like  an 
absurdity  on  first  thought,  yet  it  is  not.  The 
trained  academic  economist  will  instantly  say: 
"If  the  loan  of  wealth  (a  house,  for  instance) 
commands  a  payment  for  'time'  over  and  above 
fixed  charges  and  replacement,  then  the  money 
for  which  the  house  will  sell  must  also  command 
interest  if  loaned,  for  the  owner  may  buy  a  house 
with  it  if  he  choose."  This  sounds  like  an  irre- 
futable argument,  but  it  isn't  true.  If  the  pur- 
chasing power  of  the  money  is  increasing  by  as 
much  as  the  interest  rate  the  money  will  com- 
mand no  true  interest;  that  is,  payment  for 
'time'  during  which  the  owner  does  not  wish  to 
use  it.  Of  course  it  would  command  payment 
for  risk  if  a  doubtful  loan  were  made,  but  such 
a  loan  is  gambling. 

Now,  in  the  conditions  that  will  come  about 
within  twenty-five  to  fifty  years  after  economic 
justice  shall  have  been  established,  the  interest 
rate  for  the  loan  of  wealth  will,  I  believe,  be  as 
low  as  one  or  two  per  cent.,  and  I  believe  wages 
will  be  increasing  by  at  least  two  per  cent,  a 
year.  But  as  the  basic  money  wage  will  not 
change,  the  purchasing  power  of  money  will  be 
increasing  exactly  in  proportion  to  increase  of 
production,  wherefore  nominal  interest  for 
money  loans  will  disappear,  being  hidden  in  the 
increasing  purchasing  power. 


THE  PEACEFUL  SOLUTION    127 

When  this  situation  obtains,  a  large  percent- 
age of  all  savings  will  be  in  the  form  of  money. 
What  proportion  it  is  impossible  to  conjecture, 
even  approximately.  It  may  be  a  fifth,  a  quar- 
ter, or  more.  Should  the  communities  finally 
build  and  own  a  large  proportion  of  the  houses 
and  business  buildings,  and  conduct  a  large  per- 
centage of  the  industries  other  than  public  utili- 
ties, as  I  believe  they  will  ultimately,  savings 
will  be  still  more  largely  in  actual  cash.  Until 
such  time  savings  probably  will  be  from  50  to 
75  per  cent,  in  the  ownership  of  stocks  of  goods, 
the  machinery  of  production  and  the  stock  of 
going  concerns. 

In  the  state  of  society  we  shall  then  have,  all 
will  be  producers  during  a  large  part  of  their 
lives,  but  will  look  forward  to  ten  or  twenty 
years  of  independence  after  the  most  actively 
productive  period  of  life.  We  may  therefore 
say  that  on  the  average  each  person  will  save 
one-third  or  one-quarter  of  his  income  for  use 
later  in  life.  Call  it  a  quarter,  and  say  that 
two-fifths  of  the  saving  is  in  cash.  This  would 
be  10  per  cent,  of  the  total  production.  If  the 
present  annual  production  is  25  billions  we  may 
safely  say  it  will  be  a  hundred  billions  by  the 
time  the  population  reaches  200  millions.  This 
would  not  mean  a  doubling  of  individual  pro- 
ductivity but  that  it  had  increased  greatly  and 
that  the  present  waste  had  been  stopped. 


128  NATURAL  MONEY 

Ten  per  cent,  of  100  billions  is  ten  billions. 
As  the  saving  would  continue  in  the  average  in- 
dividual case  during  a  period  of  forty  years  and 
the  disbursement  would  occupy  ten  to  twenty 
years,  we  have  an  average  time  for  the  savings 
of  twenty-five  to  thirty  years.  Call  it  twenty- 
five  years;  twenty-five  times  ten  billions  is  250 
billions. 

Probably  much  of  this  will  be  active  as  work- 
ing capital  and  it  may  come  to  represent  coop- 
erative ownership  of  industries,  each  employe 
using  the  firm  as  a  convenient  custodian  of  his 
savings. 

I  see  no  absurdity  in  assuming  that  half  the 
savings  would  be  in  cash,  which  would  make  a 
still  larger  total,  much  of  which  would  probably 
be  loaned  without  interest.  This  may  seem  in- 
credible, but  when  we  remember  that  in  the  con- 
ditions we  shall  then  have  the  risks  of  all  ordi- 
nary business  will  be  practically  eliminated,  and 
that  loans  will  be  in  large  measure  from  fathers 
to  sons;  the  retiring  generation's  credit  balance 
in  the  business  of  the  country,  the  enormous 
figures  will  not  be  so  astounding.  My  impulse 
is  to  dispute  it,  but  when  I  remember  that  if  I 
had  planned  a  world,  knowing  that  people  live 
upon  dry  land  and  derive  their  living  mainly 
from  it,  I  should  probably  have  specified  nine- 
tenths  land  and  one-tenth  water,  yet  God  made 


THE  PEACEFUL  SOLUTION    129 

it  three-fourths  water,  I  am  restrained  from 
limiting  this  economic  ocean  of  value. 

It  is  an  interesting  fact  that  the  most  ex- 
cellent quality  of  the  money  (its  increasing  pur- 
chasing power)  is  the  very  thing  that  will  pre- 
vent payment  of  a  price  (interest)  for  its  use. 
But  interest  will  really  he  paid  because  loans 
will  be  repaid  in  units  of  increased  purchasing 
power;  but  loaned  wealth,  to  be  returned  in 
kind,  will  command  interest  because  it  is  not 
increasing  in  value.  If  it  is  known  to  be  shrink- 
ing in  value,  not  deteriorating,  but  becoming 
cheaper,  the  loss  will  be  expressed  in  the  interest 
rate.  This  is  doubtless  a  factor  in  the  present 
interest  rate  on  money,  for  gold  is  losing  value 
from  year  to  year. 

For  centuries  the  attempt  has  been  making 
everywhere  throughout  the  commercial  world 
to  liquefy  all  values  in  a  perfectly  fluid  and 
stable  system  of  credit.  The  attempt  has  always 
failed  because  the  money  systems  have  been 
fundamentally  wrong.  Even  the  inconvertible 
money  value,  though  it  was  sought  to  make  it 
representative,  has  always  been  antithetical  to 
general  values  because  the  money  issue  was  not 
regulated  solely  and  only  by  the  demands  of 
trade.  They  sought  so  to  regulate  it,  but  in 
every  instance  somebody's  judgment  and  volun- 
tary act  were  involved  in  the  increase  or  de- 
crease of  volume.  The  regulation  was  not  auto- 


130  NATURAL  MONEY 

matic  and  unconscious;  not  by  the  natural  law, 
but  an  artificial  regulation  exactly  similar  in 
principle  to  attempted  regulation  of  interest, 
wages  and  general  prices  or  the  price  of  gold, 
all  which  attempts  are  futile. 

With  the  proposed  system  we  may  find  that 
liquid  value  (money)  will  bear  about  the  same 
proportion  to  tangible  values  that  the  liquid  sur- 
face of  the  earth  bears  to  the  land,  or  even  that 
the  selling  value  of  the  land  now  bears  to  the 
annual  value. 

My  belief  is  that,  deducting  privately  owned 
permanent  improvements  and  fixed  capital,  the 
money  volume  will  come  ultimately  to  represent 
the  running  account  of  the  rising  generation  with 
the  retiring  generation,  the  credit  balance  which 
is  always  being  created  and  always  being  paid. 
Emerson  says  the  world  is  bankrupt,  but  it  is 
not  true.  It  not  only  is  solvent,  but  when  the 
assets  are  given  proper  expression  it  can  pay 
every  dollar  on  demand,  and  the  only  sufferers 
from  a  concerted  demand,  if  such  thing  were 
conceivable,  would  be  the  creditors,  for  if  all  the 
money  were  offered  rapidly  in  exchange  for 
wealth,  prices  would  go  up  a  hundred,  a  thou- 
sand, a  million  per  cent.,  if  need  be,  to  preserve 
the  balance;  because  prices  are  always  free  to 
move,  and  even  a  legal  tender  is  helpless  against 
the  natural  law  of  supply  and  demand. 

Can  anything  be  conceived  more  fitting  than 


THE  PEACEFUL  SOLUTION    131 

that  the  credits  of  the  generation  that  has  fin- 
ished its  work,  its  material  production,  its  ser- 
vices on  the  commercial  basis,  should  be  the 
instrument  of  exchange  and  account?  Is  not 
this  one  of  the  many  illustrations  of  infinite 
wisdom  that  rules  everywhere;  of  the  amazingly 
admirable  and  divinely  beautiful  laws  that 
govern  in  the  spiritual  world  no  less  absolutely 
than  laws  govern  planetary  movements  and 
atomic  processes?  I  speak  of  these  laws  as 
governing  in  the  spiritual  world  because  man's 
social  life  is  the  very  foundation  of  his  spiritual 
life,  and  he  can  have  no  close  relation  to  his 
Creator  while  his  relations  to  his  brother  are 
strained  and  inimical.  As  things  now  are  the 
race  has  the  mark  of  Cain  upon  its  forehead, 
and  in  response  to  the  accusing  voice  is  making 
the  same  answer,  "am  I  my  brother's  keeper?" 

This  inquiry  issues  nowadays  as  if  its  mean- 
ing were,  "am  I  my  brother's  provider  and  sup- 
porter?" Truly  not,  and  no  such  condition  is 
contemplated,  and  to  treat  it  so  is  an  attempt 
at  evasion  the  skulking  murderer  did  not  resort 
to.  All  that  is  asked  for  the  present  is  that 
there  shall  be  no  denial  of  opportunity  to  our 
brothers  to  be  their  own  right  kind  of  keepers; 
that  there  shall  be  no  institutional  injustice. 

When  we  have  the  proposed  system  of  money 
and  the  land  freed  from  monopoly,  the  circulat- 
ing medium,  fluid  credit,  the  blood  of  commerce, 


132  NATURAL  MONEY 

will  flow  as  freely  through  the  channels  of  trade 
as  the  blood  flows  through  the  body,  and  from 
one  generation  to  another,  even  as  the  stream 
of  life  flows  on  to  the  end  of  the  world. 

I  suppose  the  largest  conceivable  volume  of 
currency  would  be  in  the  condition  in  which  the 
communities  owned  the  bulk  of  the  enterprises 
and  tools  of  production,  but  in  which  the  people 
were  free  to  enter  the  public  service,  or  work 
independently.  Suppose  three-fourths  of  the 
enterprises  were  publicly  owned  and  the  volun- 
tary workers  were  paid  on  the  proposed  plan. 
The  savings  of  three-fourths  of  the  people 
would  then  be  all  in  money,  and  probably  one- 
quarter  of  the  savings  of  the  other  quarter  of 
the  population  would  also  be  in  money.  This 
would  make  13-16  of  the  savings  in  money. 
Now  suppose  they  arrive  at  a  state  of  develop- 
ment in  which  ten  years  of  labor  suffices  for  a 
lifetime,  and  assume  the  average  of  survival  of 
producers  to  have  reached  seventy  years;  that 
production  (aside  from  educational  work)  be- 
gins at  twenty  and  ends  at  thirty.  As  com- 
pared with  the  time  when  production  continued 
forty  years  that  would  mean  that  the  purchas- 
ing power  of  the  money  had  increased  to  four 
times  its  original  power  and  as  many  times 
more  as  the  standard  of  living  had  advanced, 
say  eight  all  told.  The  savings  would  then  be 
out  of  the  circulation  an  average  of  five  years 


THE  PEACEFUL  SOLUTION     133 

in  accumulation  and  an  average  of  twenty  years 
in  disbursement,  hence  would  equal  13-16  of  the 
total  production  of  twenty-five  years.  If  the 
population  were  200  millions  and  half  of  them 
were  counted  as  producers,  we  should  have  for 
the  savings  13-16  of  25x60  billions — 13-16  of 
1,500  billions — 1,218%  billions.  The  amount 
necessary  for  circulating  use  would  probably 
bring  the  total  up  to  more  than  1,500  billions. 

If  this  reasoning  is  sound  then  Jhe  liquid 
value  (credit)  may  reach  25  times  the  annual 
production,  in  a  state  of  society  that  is  largely 
but  not  wholly  communistic. 

But  the  money,  by  our  supposition,  has  eight 
times  the  purchasing  power,  so  the  1,500  bil- 
lions is  equivalent  to  12  thousand  billions  of  the 
original  purchasing  power.  In  other  words,  a 
worker  works  ten  years,  earning  $6,000,  where- 
as formerly  he  worked  forty  years,  earning  $24,- 
000.  But  with  his  $6,000  dollars  he  can  live 
twice  as  well  as  formerly  with  $24,000.  He 
could  therefore  live  as  well  as  formerly,  on 
$3,000,  so  the  fall  in  prices  is  to  one-eighth  the 
former  amount. 

Now,  in  this  supposed  condition  the  produc- 
tion per  capita  per  year  is  eight  times  the  for- 
mer production,  but  the  production  per  life  is 
only  twice  as  much  per  capita  because  the  stan- 
dard of  living  is  only  twice  as  high.  Of  course 
this  refers  to  wealth  production,  and  is  only  the- 


134  NATURAL  MONEY 

oretical  and  merely  for  illustration.  I  do  not 
believe  that  people  will  ever  arrive  at  a  point 
where  they  will  work  only  a  small  fraction  of 
the  time.  The  hardest  workers  are  those  who 
work  for  the  love  of  their  work.  But  they  will 
not  work  from  necessity.  Aside  from  the  rou- 
tine production  they  will  work  as  the  experi- 
mental scientist  works;  as  the  inventor,  the 
artist,  the  author,  the  explorer,  work. 

The  question  may  be  raised  as  to  the  equity 
of  a  money  that  absorbs  the  increase  of  produc- 
tivity, thus  giving  to  one  who  makes  his  sav- 
ings in  money  a  larger  return  years  later  than 
he  could  have  got  in  exchange  for  the  money 
when  he  earned  it. 

It  seems  to  me  that  all  people  are  entitled  to 
share  in  the  general  advance  of  production,  but 
a  worker  who  has  passed  the  productive  age 
and  is  living  on  his  savings  cannot  share  un- 
less his  savings  draw  interest  or  absorb  the  in- 
crease. Why  should  not  a  unit  of  manhood 
applied  in  1911  receive  the  same  reward  in 
1915,  if  the  reward  be  taken  then,  as  accrues  to 
the  energy  applied  in  1915?  The  advantage 
accrues  to  the  inactive  and  yet  immature;  to 
those  yet  unborn;  shall  it  not  accrue  to  the  now 
active  producers?  If  such  be  the  natural  law 
we  must  grant  that  it  makes  for  the  applica- 
tion of  all  energy  in  its  prime,  thus  assuring 
the  best  service. 


THE  PEACEFUL  SOLUTION    135 

The  deduction  that  follows  is  that  the  natu- 
ral interest  rate  is  an  expression  of  the  increase 
in  the  productivity  of  labor.  It  will  not  apply 
to  loans  of  a  money  that  absorbs  the  increase, 
but  it  will  apply  to  property  loans  in  such  way 
as  to  return  to  the  lender  the  same  amount  of 
labor  "applied  at  the  later  period"  and  there- 
fore applied  more  productively.  Thus  the  bor- 
rower benefits  and  the  lender  shares  in  the 
general  progress. 

Bearing  in  mind  the  fact  that  in  these  con- 
ditions a  day's  wages  would  probably  furnish 
three  or  four  days'  subsistence,  taking  the  aver- 
age through  life,  and  that  ostentation  and  snob- 
bery would  have  gone  out  of  fashion,  it  seems 
probable  that  accumulation  for  private  use  be- 
yond a  standard  of  living  to  be  found  in  every 
community  will  not  prevail.  When  there  is  no 
question  of  such  a  living  as  is  now  enjoyed  by  a 
small  family  with  five  or  six  thousand  dollars  a 
year  income,  there  will  be  no  strong  induce- 
ment to  inordinate  accumulation,  as  there  now 
is.  Wise  parents  will  not  care  to  leave  large 
inheritances  even  to  daughters.  The  individual 
productive  industry  will  therefore  probably  be 
applied  with  practical  continuity  for  about 
thirty-five  years  of  life,  after  which  time  the 
individual  will  be  occupied  in  travel,  study,  so- 
cial intercourse  and — more  work;  for  few  people 
are  able  to  be  happy  without  employment.  I 


136  NATURAL  MONEY 

said  they  would  probably  work  with  practical 
continuity  for  about  thirty-five  years.  This 
does  not  mean  as  people  now  work,  six  days  in 
the  week  and  twelve  months  in  the  year,  except 
for  an  occasional  holiday,  and  year  after  year 
in  the  same  place.  It  is  probable  that,  count- 
ing Sundays,  there  would  be  more  than  a  hun- 
dred holidays  in  the  year,  and  as  employment 
would  be  found  everywhere  at  all  times,  people 
could  travel  much  without  loss  of  time  at  work, 
would  live  among  and  be  of  the  people  wher- 
ever they  were,  and  thus  see  much  of  the  world 
even  in  their  young  days.  It  may  be  that  as  a 
rule  people  would  be  anchored  only  when  rear- 
ing a  family,  and  later  in  very  advanced  age. 

Even  if  individual  savings  were  for  only  a 
third  of  the  life  period  it  would  represent  $7,000 
for  each  of  those  in  the  productive  period,  a 
total  of  350  billions  for  one-fourth  of  the  pop- 
ulation of  200  millions.  It  seems  probable, 
therefore,  that  a  large  part  of  the  savings  would 
be  in  the  form  of  investments  bearing  no  inter- 
est or  a  very  low  rate,  and  to  be  paid  off  grad- 
ually. As  before  said,  the  savings  would  be 
largely  in  the  business  of  the  country  (stores, 
mills  and  buildings  of  all  sorts),  and  the  trans- 
fer of  these  from  one  generation  to  the  next  (a 
continuous  process),  would  enable  the  retiring 
generation  to  realize  its  savings  that  were  not 


THE  PEACEFUL  SOLUTION    137 

in  the  form  of  money,  probably  one-half  or 
more. 

But  it  is  plain  that  such  money  will  hold  its 
value  without  reference  to  quantity  so  long  as 
the  quantity  does  not  exceed  the  demands  of 
trade;  and  the  "demands  of  trade"  include  all 
that  is  used  for  purposes  of  savings.  And  if 
it  commands  no  interest  but  gets  the  equivalent 
in  the  increase  of  purchasing  power  it  will  be 
so  used.  As  every  dollar  of  it  was  born  a 
free  dollar  (given  in  exchange  for  a  day's 
labor  voluntarily  rendered),  and  as  none  can 
issue  in  any  other  way,  it  can  never  lose  its 
value  except  by  the  universal  fall  of  wages. 

Even  if  ground  rent  were  taken  only  in  part, 
interest  having  almost  disappeared  and  there 
being  no  taxes  except  on  land,  wages  would 
still  be  high,  for  when  enforced  idleness  is  at 
an  end  and  the  present  obstacles  to  business 
are  removed  the  annual  production  of  the  pres- 
ent population  will  certainly  be  thirty  billions 
aside  from  public  works.  Assume  that  the  land- 
lords still  retain  five  billions  of  this  and  that 
interest  takes  three  billions  more;  this  will  leave 
twenty-two  billions — about  twice  what  labor 
gets  now. 

Still,  lest  there  be  doubt  in  the  mind  of  any 
one  as  to  this,  let  us  view  it  in  another  way. 

As  the  volume  grows  gradually  from  the 
beginning,  the  difficulty,  if  there  should  be  a 


138  NATURAL  MONEY 

difficulty,  would  finally  show  itself  by  failure 
of  labor  to  offer  for  public  service.  Such  a 
happening  would  mean  that  private  employers 
were  paying  more  than  $2.00  per  day  for  com- 
mon labor.  This  would  not  be  a  serious  mat- 
ter; would  simply  mean  that  labor  had  a  work- 
ing interest  in  ground  rent,  and  the  condition 
would  cure  itself  automatically,  for  as  taxes 
were  paid  the  currency  would  contract  and 
prices  would  fall,  soon  after  which  wages  in 
private  employment  would  fall  below  the  pub- 
lic wage,  when  public  work  would  be  resumed. 
Also,  let  it  be  noted  that  if  labor  that  should 
go  into  the  public  service  were  kept  out  by 
such  method  but  a  large  amount  of  ground  rent 
retained  by  the  landlords,  redundancy  (the  so- 
called  "over-production")  would  soon  result, 
prices  would  fall  and  private  employers  be 
forced  to  abandon  the  policy. 

Still  it  may  be  urged  that  the  enormous  vol- 
ume which  is  sure  to  issue,  though  not  redund- 
ant at  the  tune,  may  afterward  become  so. 

This  does  not  seem  possible,  but  suppose  it 
should  happen.  If  it  did  not  happen  suddenly  it 
would,  at  the  start,  be  the  situation  last  consid- 
ered, and  to  assume  it  could  Jiappen  suddenly  is 
to  assume  an  absurdity.  However,  let  us  as- 
sume it.  Assume  that  of  a  sudden  it  should  re- 
quire four  dollars  instead  of  two  to  induce  men 
to  enter  the  public  service.  This  would  mean 


THE  PEACEFUL  SOLUTION    139 

that  private  wages  had  also  suddenly  risen  from 
two  to  four  dollars;  suddenly  risen,  because,  if 
they  had  gone  up  gradually  the  public  wage 
necessary  to  command  common  labor  would  also 
have  gone  up  gradually,  which  is  contrary  to 
the  supposition;  really  the  supposition  previous- 
ly disposed  of.  Wherefore,  if  such  a  situation 
could  really  exist,  it  would  simply  mean  that 
common  labor  had  ceased  to  exist;  that  all  labor 
was  skilled  labor,  and  all  high  priced. 

To  double  the  wage  is,  in  effect,  to  preserve 
the  wage  and  cancel  half  the  currency. 

Whatever  the  volume  of  the  currency,  if  any 
common  laborers  are  in  the  public  service,  the 
money-wage  must  equal  the  product  of  a  com- 
mon labor-day,  and  if  a  time  should  ever  come 
when  there  is  no  more  common  labor;  when  all 
labor  is  skilled,  then  skilled  labor  will  become 
the  basis  of  wages.  If  there  should  still  re- 
main common-labor  work  to  be  done,  as  of 
course  would  be  the  case,  it  would  probably 
command  a  premium  because  of  its  unpleasant- 
ness and  would  cease  to  be  the  standard. 

Under  this  system,  if  interest  should  disap- 
pear or  be  only  nominal,  at  the  end  of  half  a 
century  wages  would  be  substantially  all  that  is 
produced,  for  by  that  time  we  should  have  ab- 
sorbed all  of  the  ground  rent. 

The  foregoing  are  mere  prognostications,  and 
like  our  weather  bureau  service,  only  of  gen- 


140  NATURAL  MONEY 

eral  value.  It  appears  to  me  they  are  founded 
on  a  logical  certainty  (that  savings  will  be  large- 
ly in  money  when  its  purchasing  power  is  in- 
creasing hy  as  much  as  the  rate  of  interest  on 
property  loans),  but  still  only  rough  guesses  as 
to  the  amount.  It  has  already  been  stated  that 
"free  labor"  is  another  phase  or  expression  of 
land  value,  and  in  the  reasoning  as  to  volume 
it  seemed  to  me  I  ought  to  be  able  to  trace  the 
transformation  and  find  all  the  land  value  in 
the  money,  even  as  we  now  find  all  free  labor 
(the  idle  and  the  disemployed)  in  land  value, 
but  I  was  not  satisfied  that  sixty  billions  of 
dollars  is  the  limit  even  for  our  present  popula- 
tion and  state  of  advancement,  the  other  lines 
of  reasoning,  though  far  from  certain,  point- 
ing to  a  larger  supply. 

But  I  had  forgotten  a  factor,  and  when  this 
factor  comes  in  it  corroborates  the  largest  esti- 
mate for  present  population,  or,  rather,  goes 
beyond  it. 

I  had  forgotten  the  fall  of  the  interest  rate. 
If  that  goes  down  to  2  per  cent,  six  billions  of 
annual  value  will  capitalize  at  300  billions,  and 
if  the  annual  value  should  double,  as  it  almost 
certainly  will,  the  money  will  doubtless  double 
also.  Not  only  is  the  land  value  almost  cer- 
tain to  double  within  a  century,  having  doubled 
in  about  a  quarter  of  that  length  of  time  just 
past,  but  the  interest  rate  of  2  per  cent,  may 


THE  PEACEFUL  SOLUTION    141 

fall  to  1  per  cent.,  in  which  case  12  billions  of 
annual  value  would  capitalize  at  1,200  billions, 
and  the  money  volume  might  rise  to  that  enor- 
mous total. 

This  would  give  a  per  capita  of  $3,000  to 
400  million  people,  or  five  years  of  common 
labor  wages  saved  in  money;  at  least  largely 
saved  in  money.  If  men  are  productive  dur- 
ing forty  years  of  life  they  ought  to  save  at 
least  ten  years'  product.  How  much  will  be  in 
permanent  improvements  privately  owned  is 
another  conjecture.  It  is  probable  that  in  man- 
ufacture the  value  of  tools  for  each  worker  will 
mount  to  many  times  what  it  is  now — perhaps 
to  five  thousand  dollars  or  more,  and  if  so,  the 
"demands  of  trade"  for  money  as  a  repository 
of  savings  will  be  correspondingly  less. 

Land  having  been  hitherto  the  only  safe  re- 
pository of  savings  for  those  who  have  no  skill 
in  the  investing  of  funds,  it  seems  especially  fit- 
ting that  the  cutting  off  of  this  mode  of  sav- 
ing should  make  available  another  and  a  safer 
mode.  Investments  in  land  under  our  present 
system,  though  a  certain  guaranty  against  total 
loss,  are  not  quantitatively  safe  and  in  no  case 
are  they  a  quick  asset.  The  proposed  system 
will  furnish  to  the  unskilled  a  growing  invest- 
ment for  savings,  and  on  equal  terms  to  all. 

From  all  the  foregoing  considerations  it 
seems  certain  that  "free  labor"  will  go  into  the 


142  NATURAL  MONEY 

public  service  in  such  force  as  to  increase  the 
volume  of  currency,  and  as  the  influences  will 
act  cumulatively  to  that  end,  it  is  probable  the 
volume  will  be  many  times  multiplied  before 
the  fifty  years'  period  is  ended.  Let  us  assem- 
ble these  influences: 

Increased  per  capita  production  will  steadily 
increase  the  volume  of  business  and  call  for  in- 
creased volume  of  money. 

Setting  all  the  disemployed  to  work  and  shift- 
ing to  productive  employment  the  many  who  are 
now  unproductively  employed  in  overcoming 
the  artificial  difficulties  of  business  under  the 
present  system,  will  further  increase  the  total 
annual  production  and  make  more  money  neces- 
sary. 

Business  activity  will  be  uninterrupted  by 
periods  of  depression,  and  the  total  product 
for  a  series  of  years  be  thus  greatly  increased, 
calling  for  a  larger  volume  of  money. 

The  interest  rate  will  fall,  thus  taking  one  of 
the  brakes  off  business  and  making  for  increased 
yolume. 

Business  will  gradually  go  to  a  cash  basis, 
and  in  proportion  as  it  does,  the  cash  basis  will 
call  for  an  enormous  increase  of  volume.  (It 
will  not  necessarily  be  actual  cash  on  delivery, 
but  with  cash  in  bank  and  settlement  by  check 
at  the  week  end.) 

The  very  considerable  tendency  to  make  sav- 


THE  PEACEFUL  SOLUTION     143 

ings  in  cash  will  make  for  increase  of  volume, 
and  the  increase  of  population  we  must  look 
forward  to  will  call  for  a  proportionate  increase 
of  money  supply.  In  any  event,  the  amount 
will  be  what  it  should  he,  and  there  is  no  occa- 
sion to  shrink  from  the  deductions  of  our  own 
reasoning,  however  startling  they  may  be. 


XV 

APPORTIONING  TAXES 

OOON  after  men,  through  the  help  of  prim- 
^  itive  government,  were  comparatively 
safe  in  their  sowing  and  reaping,  they  found  the 
conditions  of  life  so  much  improved  that  they 
began  to  lay  by  a  more  bounteous  store,  and 
ere  long  developed  decided  emulation  and  riv- 
alry of  possession.  Not  only  individuals,  but 
tribes  or  nations  would  develop  this,  for  the 
tribe  or  nation  with  the  largest  store  would  have 
decided  advantage  in  case  of  war. 

As  a  result  of  this  men  became  so  intent  upon 
accumulation  that  they  came  to  have  little 
thought  of  their  governmental  duties,  leaving 
government  almost  wholly  to  others,  so  that  in 
the  course  of  time  society's  protectors  (officials) 
learned  to  rob  them  even  more  than  pirates  and 
brigands  had  done  before;  but  the  method  be- 
ing peaceful  and  by  indirection,  and  under 
cover  of  law,  and  production  having  increased 
so  enormously,  the  seriousness  and  extent  of  the 
robbery  were  not  understood  by  the  people  and 
even  now  are  realized  by  only  a  few,  though  the 
people  are  learning. 

Still  later  this  robbery  was  reduced  to  a  sci- 
ence, but  the  inventors  of  the  methods  did  not 


THE  PEACEFUL  SOLUTION    145 

enjoy  the  full  fruit  of  their  invention,  for  it 
came  to  pass  that  resourceful  men  of  affairs  in- 
vented methods  to  rob  the  robbers. 

If  the  people  at  large  could  only  understand 
that  no  government  in  the  world  can  protect 
them  from  these  modern  predatory  hordes  ex- 
cept by  requiring  from  each  one  his  share  of 
communal  service,  and  that  in  this  day  and  age 
nine-tenths  of  all  governmental  activity  should 
be  devoted  to  doing  things  instead  of  to  ruling, 
great  progress  would  be  made  in  government 
and  the  general  condition  advanced  almost  be- 
yond conception. 

When  it  is  understood  that  from  ten  to  fifty 
per  cent,  of  human  activity  must  be  devoted  to 
communal  benefits  (actual  governing  and  pub- 
lic utilities)  or  be  sacrificed  to  these  modern  pre- 
daceous  interests,  it  would  seem  that  only  the 
most  sordid  and  selfish  could  prefer  the  latter. 

But  this  service  must  be  apportioned  in  some 
way  unless  all  are  to  render  an  equal  amount 
for  the  common  good. 

We  have  seen  that  all  the  activity  which  can- 
not be  more  profitably  engaged  in  private  em- 
ployment should  be  engaged  in  public  work, 
and  that  the  receipts  given  in  acknowledgment 
constitute  the  currency,  the  quantity  and  value 
of  which  are  automatically  regulated  as  they 
should  be;  that  under  such  system  the  money 
wage  is  merely  the  title  to  such  share  of  the 


146  NATURAL  MONEY 

total  product  as  constitutes  the  individual's  nat- 
ural wage,  wherefore  the  proposed  money  is 
the  natural  money;  that  through  its  agency  the 
individual's  communal  product,  his  undivided 
interest  in  public  property,  which  cannot  be  ap- 
propriated by  him,  but  must  be  used  by  all,  be- 
comes the  agency  by  which  the  product  of  his 
privately  applied  industry  is  exchanged. 

Now,  if  All-wise  Nature  provided  for  a  nat- 
ural money  which  is  to  issue  (be  born)  by  the 
giving  of  receipts  for  service  rendered  (we  may 
call  them  certificates  of  ownership  of  public 
benefits),  which  receipts  are  to  be  canceled  when 
they  come  back  as  taxes,  or  reissued  in  acknowl- 
edgment of  further  service — if  all  this  has  been 
provided  for  by  nature,  it  must  be  there  is  some 
natural  method  of  apportioning  the  service  to 
be  rendered  by  each  individual  for  the  common 
good,  or  at  least  for  the  general  good. 

The  method  of  apportioning  this  service  in 
common  use,  called  levying  taxes,  is  as  crude 
and  unscientific  as  the  money  systems  in  use, 
and  prevents  such  progress  as  we  should  make 
under  a  sound  system.  The  almost  universal 
plan  is  based  upon  the  doctrine  that  all  per- 
sons should  pay  taxes  in  proportion  to  their 
ability  to  pay,  and  this  is  one  of  those  most 
dangerous  of  all  fallacies — dangerous  because  it 
sounds  so  plausible  that  few  people  have  ques- 
tioned its  correctness  until  very  recently,  and 


THE  PEACEFUL  SOLUTION    147 

most  persons  still  believe  it.  It  appeals  to  the 
poor  who  are  ignorant  of  the  principles  involved 
because  it  appears  to  be  an  assumption  of  the 
burdens  of  government  by  the  rich. 

But  though  people  accept  this  as  a  truism 
they  would  deny  it  instantly  if  it  were  said  of 
other  things  than  government.  If  a  merchant 
should  attempt  to  charge  his  customers  in  pro- 
portion to  their  ability  to  pay  he  would  very 
soon  lose  all  except  those  who  could  not  pay. 
Under  such  a  system  the  pauper  could  buy  as 
many  goods  as  the  multimillionaire. 

Government  is  for  the  benefit  of  all  the  peo- 
ple, but  it  does  not  follow  that  it  confers  equal 
benefits  on  all  persons,  and  it  can  easily  be 
shown  that  it  does  not. 

In  a  primitive  society,  where  the  chief  object 
of  the  social  compact  was  protection  against  at- 
tacks by  raiders,  in  case  of  attack  all  the  men 
would  turn  out  and  give  their  lives  if  neces- 
sary, for  the  common  defense.  But  when  the 
population  had  become  so  great  that  ordinarily 
there  was  no  danger  from  without,  and  govern- 
ments had  begun  to  furnish  something  more 
than  protection  to  life  and  property,  then  the 
service  required  from  each  adult  male  was  not 
obviously  equal.  Indeed,  it  seems  probable 
that  as  protection  was  largely  for  crops,  flocks 
and  herds,  as  well  as  for  life,  the  tax  contribu- 
tion required  from  each  head  of  a  family  or 


148  NATURAL  MONEY 

group  of  families  may  have  been  approximate- 
ly proportioned  to  the  amount  of  such  crops, 
flocks  and  herds  to  be  protected,  and  when 
contributions  were  necessary  for  the  building 
of  roads,  for  courts  and  administrative  officers, 
the  plan  of  apportioning  the  cost  was  simply 
continued  on  the  old  basis;  and  up  to  this  time 
the  plan  was  not  far  wrong.  But  when  em- 
ployment became  still  more  diversified  and  the 
exchanging  of  products  became  almost  as  great 
industrially  as  production  itself,  it  came  to  pass 
that  the  benefits  of  public  utilities  did  not  inure 
to  all  alike,  whatever  had  been  the  case  before. 

It  is  self-evident,  for  instance,  that  roads  are 
much  more  important  in  the  exchanging  of 
products  than  in  making  or  growing  them.  A 
farmer  can  live  very  comfortably  without  any 
other  road  than  a  mere  passageway  over  the 
natural  surface.  He  can  produce  everything 
he  consumes  except  probably  a  single  wagon 
load  of  groceries,  tools  and  appliances.  Many 
of  our  grand-parents  did  it  and  lived  happy  and 
useful  lives. 

But  the  merchant,  who  is  the  exchanger  of 
things,  and  all  who  live  directly  or  indirectly 
by  the  production  of  things  they  cannot  con- 
sume, but  must  exchange  for  food  and  raw 
products,  all  these  persons  are  much  more  in- 
terested in  facilities  for  exchanging  things 
(roads)  than  the  farmer  is,  for  a  large  part  of 


THE  PEACEFUL  SOLUTION    149 

the  material  they  consume  is  transported  over 
the  roads,  and  if  the  roads  are  good  it  will  come 
to  them  more  abundantly  and  more  cheaply 
than  if  the  roads  were  bad.  The  consumer  pays 
all  necessary  cost  to  the  point  of  consumption, 
and  whatever  lowers  cost  to  all  producers  will 
be  for  his  benefit. 

But  the  farmer  also  consumes  much  that  is 
brought  from  elsewhere,  though,  as  said,  he  can 
get  along  with  very  little  except  his  own  pro- 
duction. He  derives  much  benefit  from  good 
roads,  not  only  in,  a  material  way — a  purely 
business  way — but  also  in  a  social  way. 

So  the  exchangers  get  more  benefit  and 
should  pay  more  of  the  cost  of  roads  than  farm- 
ers, but  the  farmers  should  pay  much. 

Then  there  are  persons  from  abroad  who 
travel  on  the  roads,  and  they  derive  some  bene- 
fit, and  should  pay  in  proportion  to  the  benefit. 

It  seems  like  an  utter  impossibility  even  to 
trace  all  these  benefits,  and  quite  hopeless  to  ap- 
portion them  equitably,  and  make  collection. 
Even  if  it  could  be  done  the  cost  of  doing  it 
would  eat  up  a  large  percentage  of  the  revenue. 

What  a  saving  it  would  be  if  all  persons  were 
so  honest  that  they  would  deposit  their  toll  in 
boxes  and  thus  save  the  expense  of  collection 
by  means  of  toll  gates  and  keepers.  Yet  it 
would  not  save  all,  for  the  travelers  would  have 
trouble  and  delay,  and  somebody  would  have  to 


150  NATURAL  MONEY 

collect  from  the  boxes  and  keep  accounts  of 
collections,  and  these  persons  would  be  a  charge 
on  the  community. 

It  is  very  interesting  and  instructive  to  con- 
sider the  inventions  of  man  and  by  search  seek 
to  find  out  to  what  extent  nature  forestalled 
him.  A  saw  is  one  of  our  most  useful  tools, 
and  is  said  to  have  got  the  inventor  into  trou- 
ble with  his  jealous  uncle,  and  the  account 
says  the  pattern  was  a  fish's  spine,  so  Nature 
really  invented  it  and  the  man  simply  discov- 
ered it — as  men  often  have  done.  The  auger 
is  another  very  old  and  very  useful  tool,  but 
Nature  made  augers  millions  of  years  before 
man  "invented"  them,  and  her  augers  can  bore 
crooked  holes,  chamber  out,  turn  at  right  an- 
gles, and  can  leave  auger  seeds  that  will  insure 
thousands  more  augers,  to  bore  holes  as  if  for  the 
sport  of  boring,  as  our  woodsman  knows  to  his 
sorrow.  Shears,  pincers,  hammers,  picks,  trow- 
els, knives,  engines,  pumps,  valves,  guns,  atom- 
izers, swords,  arrows,  spikes  (even  the  devil's 
spiked  tail  is  an  infringement),  pockets  (that 
never  rip) — almost  anything  you  can  think  of, 
self -sharpening  tools — Nature  made  them  first. 

Now,  what  an  amazingly  astonishing  thing  it 
would  be  if  we  should  find  that  she  really  did 
also  invent  a  toll  gate — the  cheapest  and  best 
one  ever  invented;  that  she  was  ahead  of  the 
penny-in-the-slot  man  by  so  many  thousand 


THE  PEACEFUL  SOLUTION    151 

years  there  are  no  records;  an  automatic  gate 
that  not  only  collects  the  toll  from  the  speeding 
auto  without  slackening  the  pace,  but  collects 
just  the  right  amount,  thus  saving  the  road 
commissioners  the  trouble  of  making  a  schedule 
of  rates;  and  this  automatic  toll  gate  never  gets 
your  penny  and  fails  to  deliver  the  goods.  It's 
an  honest  toll  gate,  taking  neither  too  much  nor 
too  little,  nor  ever  failing  to  collect.  It  recog- 
nizes no  deadheads. 

And  it  not  only  collects  toll  for  the  highways, 
but  for  many  other  public  benefits  that  come  to 
us  through  all  the  channels  of  the  social  com- 
pact we  call  government. 

But  this  I  am  obliged  to  admit,  it  does  not 
take  the  collections  to  the  public  treasury  and 
pour  them  in,  so  there  is  a  constant  stream 
pouring  out  of  the  millions  of  gates,  which  is 
being  appropriated  by  people  who  are  in  a  po- 
sition to  do  so.  Strange  as  it  may  seem — in- 
credible, unbelievable,  the  government  has  made 
a  practice  of  giving  exclusive  licenses  to  in- 
dividuals to  collect  these  pouring  streams  for 
their  private  use,  and  then  has  sent  out  emis- 
saries to  force  the  people  to  pay  again  what 
they  have  already  paid  through  the  toll  gates. 

For  these  toll  gates  are  Nature's  taxgather- 
ers.  All  the  natural  money  we  have  been  talk- 
ing about,  born  as  we  have  seen  by  being  is- 
sued in  exchange  for  communal  service,  lives 


152  NATURAL  MONEY 

its  life  (a  very  useful  one),  circulating  among 
the  people  and  apportioning  to  them  their  re- 
spective shares  of  "things  to  use,"  and  just  as 
rapidly  as  new  ones  are  born  (except  for  in- 
creased requirements)  the  old  ones  find  their 
way  back  through  the  toll  gates,  to  whence 
they  came,  even  as  men  do;  to  await  rebirth  to 
further  usefulness — even  as  men  do. 

And  we  may  now  add  to  our  list  of  corre- 
spondences the  precise  correspondence  between 
the  total  of  ground  rent  and  the  "free  labor"  of 
any  community,  which  is  the  amount  that  should 
find  expression  in  public  benefits — in  govern- 
ment. 


XVI 

NOT  THE  LABOR  CHECK  SYSTEM 


one  may  say  that  the  proposed  money 
is  nothing  but  the  socialist  labor-check 
system  under  another  name,  but  a  moment's 
thought  shows  that  this  is  not  true. 

The  socialist's  proposal  is  that  all  shall  be 
employed  by  the  government  and  all  the  prod- 
uct be  owned  by  the  government  and  sold  back 
in  exchange  for  labor  checks. 

Under  such  system  the  prices  at  which  things 
should  sell  must  be  fixed  by  boards  of  control, 
and  even  if  they  could  fix  prices  equitably  the 
labor  of  doing  so  would  be  wasted  energy. 
Prices  are  automatically  fixed  in  a  free  market 
by  the  interaction  of  offering  and  bidding,  but 
where  the  government  owns  everything  the 
price  must  be  set  by  authority.  Imagine  the 
gigantic  accounting  system  necessary  to  keep 
track  of  the  cost  of  the  various  things  pro- 
duced, and  even  if  the  data  were  in  hand  for 
this,  the  labor  of  making  up  the  price  list  for  a 
year  or  for  any  period  of  time.  Then  prices 
would  have  to  be  changed  from  time  to  time 
by  order  of  somebody  or  of  some  board.  The 
price  of  an  article  cannot  be  the  labor  check  cost 
of  it,  for  if  this  were  so  the  officials  and  those 


153 


154  NATURAL  MONEY 

engaged  in  public  works  would  have  no  goods 
in  exchange  for  their  checks.  Besides  this, 
value  is  not  cost  of  production.  Some  goods 
will  be  taken  quickly  at  a  given  price,  even 
above  cost  of  production,  while  others  will  re- 
main unsold  and  perhaps  be  left  to  spoil  at  cost 
or  even  much  less  than  cost.  People  could  not 
be  forced  to  buy;  and  who  knows  the  cost  of 
the  first  strawberries  in  the  market,  or  the  cost 
of  a  porterhouse  steak  as  compared  with  an- 
other cut  from  the  same  animal?  The  relative 
prices  of  two  cuts  will  depend  on  the  tastes 
of  the  consumers.  If  they  are  stalwart  work- 
men who  eat  to  live,  the  difference  will  not  be 
great;  if  they  are  dainty  men  who  live  to  eat, 
the  porterhouse  will  command  a  high  premi- 
um. Not  all  the  boards  in  the  country  could 
set  prices  right.  And  who  could  tell  the  value 
of  a  work  of  art? 

If  the  prices  of  things  are  set  by  any  influ- 
ence except  the  competition  of  desires,  things 
will  not  reach  their  highest  economic  destiny; 
that  is,  will  not  find  the  most  intense  desires  to 
which  they  can  respond,  and  will  thus  fail  to 
produce  the  highest  possible  enjoyment. 

Under  the  proposed  system  not  a  dollar's 
worth  of  goods  to  be  sold  will  cause  the  issu- 
ance of  money,  when  produced,  or  afterward, 
unless  sold  to  the  government.  Only  that  serv- 
ice which,  being  for  the  community,  cannot  find 


THE  PEACEFUL  SOLUTION    155 

its  reward  in  the  product,  causes  the  money  to 
issue.  In  other  words:  All  men  labor,  those 
who  do  not  find  private  employment  working 
for  the  government.  This  makes  a  minimum 
wage,  because  the  more  efficient  will  work  for 
themselves  or  a  private  employer  and  enjoy  a 
better  return. 

Another  important  difference  between  this 
and  the  labor  check  system  is  that  it  makes  all 
government  work  voluntary  and  leaves  every 
individual  to  set  the  price  on  his  product  as 
he  may  see  fit,  and, 

It  preserves  all  the  individual  initiative  and 
incentive  to  enterprise. 

Except  for  unrelated  influences  it  secures  all 
the  socialists  seek,  employment  for  all  at  all 
times,  and  avoids  the  leveling  influences  insep- 
arable from  all  the  socialistic  plans  I  am  fa- 
miliar with. 

It  is  therefore  as  different  from  the  labor 
check  system  as  day  is  from  night. 

Since  writing  the  foregoing  I  have  been  told 
of  a  plan  which  proposed  the  establishment  by 
government  of  some  particular  work  to  furnish 
a  standard,  or  perhaps  a  sort  of  overflow,  for 
labor,  but  have  not  seen  nor  heard  the  de- 
tails and  am  unprepared  to  say  whether  it  has 
any  points  of  resemblance  to  the  proposed  sys- 
tem. 


xvn 
BUYING  THE  LAND 

buy  the  land  under  present  conditions, 
giving  interest-bearing  bonds  in  exchange, 
would  be,  in  large  measure  at  least,  only  to 
change  the  form  of  the  burden.  Land  and 
public  utilities  privately  owned  would  prob- 
ably total  about  75  or  80  billions  of  dollars,  and 
even  if  the  government  could  pay  the  interest 
and  reduce  the  indebtedness  by  one  and  one- 
half  billions  a  year  it  would  not  be  advisable 
to  do  it  in  this  way,  for  with  our  present  money 
system  it  would  probably  have  a  demoralizing 
effect.  The  better  plan  is  simply  to  pass  the 
necessary  law,  and  after  putting  all  taxes  on 
land,  which  should  be  done  whatever  system 
of  money  we  have,  proceed  in  the  following 
manner: 

First — Exempt  from  the  increase  hereinafter 
provided  for,  from  $100  to  $500  annual  land 
value  to  heads  of  families  only,  beginning  at 
fifty  years  of  age  and  increasing  the  exemp- 
tion gradually  to  the  maximum  at  seventy 
years,  and  a  lesser  exemption  to  persons  over 
sixty,  but  not  heads  of  families. 

After  these  exemptions  are  arranged  for,  pro- 
vide the  following,  or  similar,  advancing  scale 


156 


THE  PEACEFUL  SOLUTION    157 

for  taking  over  the  remainder  of  all  land  values. 
Assuming  five  billions  as  the  total  value  above 
present  taxes,  we  shall  have: 

Billions 

1st  5  y*.  period  00       leaving  landlords  100%=  25.00 

2nd  5  yr.  period  10%  leaving  landlords  90%=  22.50 

3rd  5  yr.  period  15%  leaving  landlords  85%=  21.25 

4th  5  yr.  period  20%  leaving  landlords  80%=  20.00 

5th  5  yr.  period  25%  leaving  landlords  75%=  18.75 

6th  5  yr.  period  30%  leaving  landlords  70%=  17.50 

7th  5  yr.  period  35%  leaving  landlords  65%=  16.25 

8th  5  yr.  period  45%  leaving  landlords  55%=  13.75 

9th  5  yr.  period  60%  leaving  landlords  40%=  10.00 

10th  5  yr.  period  80%  leaving  landlords  20%=     5.00 

llth  5  yr.  period  100%  leaving  landlords  00    =     0.00 


Total  *  170.00 

Equalizing  the  time,  this  sum  comes  to  the 
land  owners  as  if  it  were  paid  in  13.785  years, 
and  its  "present  value"  on  a  5  per  cent,  com- 
pound interest  basis  is  a  little  over  86  billions, 
400  millions;  on  a  3  per  cent,  compound  basis, 
113  1-3  billions. 

The  total  taxes  during  the  fifty-year  period 
will  be  50  times  the  present  taxes,  estimated  at 
two  billions  a  year,  and  80  billions  from  the 
increase.  Probably  we  should  deduct  50  bil- 
lions from  this  on  account  of  the  exemptions 
from  increase,  thus  making  the  total  net  taxes 
130  billions. 

The  administrative  cost  of  government  could 


158  NATURAL  MONEY 

hardly  exceed  one  billion  a  year,  so  at  least  80 
billions  would  go  into  public  works  and  ex- 
pense other  than  administrative,  and  after  a  few 
years  these  other  expenses  would  be  small.  But 
this  is  the  minimum  (130  billions)  that  could 
issue  during  the  time  without  expanding  the  cir- 
culation. The  amount  that  would  issue  would  be 
about  600  times  the  number  of  men  to  whom  pri- 
vate employers  would  not  pay  $2.00  a  day  or 
better.  So  long  as  everybody  is  so  employed 
without  expanding  the  currency,  well  and  good, 
but  at  the  end  of  twenty-five  years  the  amount 
required  to  pay  taxes  will  be  $3,250,000,000,  and 
if  only  one  billion  is  used  for  administration, 
two  and  a  half  billions  must  find  tangible  ex- 
pression in  public  works. 

As  the  landlords  will  get  their  pay  for  the 
land  by  retaining  it  out  of  ground  rent,  we  may 
be  sure  of  their  hearty  cooperation  to  avoid  a 
stringency.  There  could  be  no  stringency,  for 
that  would  mean  lack  of  employment  in  private 
enterprise,  which  would  send  labor  into  public 
service  and  cure  the  stringency  as  soon  as  it  be- 
gan to  be  felt. 

Let  us  examine  another  supposition.  For 
the  sake  of  illustration,  suppose  the  primary 
tendency  were  for  no  free  labor  to  enter  the 
public  service;  that  during  the  first  five-year 
period  government  expenses  were  two  billions 
and  taxes  two  billions.  The  first  vear  of  the  sec- 


THE  PEACEFUL  SOLUTION    159 

ond  five-year  period  taxes  increase  by  500  mil- 
lions.  If  labor  still  stays  out  of  the  public  ser- 
ice  it  can  only  be  because  private  employers  are 
paying  at  least  $2.00  a  day  for  common  labor. 
But  one-quarter  of  the  currency  has  been  can- 
celed by  being  paid  in  as  taxes,  so  that  $2.00  is 
now  $2.66  in  purchasing  power;  that  is,  prices 
are  falling  and  rents  must  fall  as  soon  as  leases 
are  ended.  The  next  year  the  same  thing  will 
happen  and  the  currency  be  reduced  to  one 
billion. 

It  is  impossible.  The  volume  will  increase 
for  decades,  possibly  for  a  century  or  more,  and 
as  before  said,  may  ultimately  be  shown  to  be 
the  counterpart  and  persistent  expression  of  all 
land  value. 

Whatever  proportion  of  the  "free  labor" 
counterpart  of  ground  rent  may  actually  go 
into  the  public  service  it  is  certain  that  wages 
will  rise  because  there  will  be  no  competition 
for  jobs;  and  though  ground  rent  may  not  fall 
— may  even  increase  from  the  start — wages 
will  advance  by  at  least  a  part  of  the  increase  of 
production  which  will  result  because  unemploy- 
ment will  be  at  an  end. 

If  land  values  should  increase  largely  during 
the  fifty-year  period  the  compensation  to  the 
landlords  would  be  still  better,  for  increase  of 
taxes  always  lags  behind  increase  of  values ;  usu- 
ally by  several  years. 


160  NATURAL  MONEY 

If  the  landlords  insist  this  is  not  a  fair  price 
for  the  land,  then  I  would  offer  an  alternative 
proposition,  as  follows: 

The  government  proposes  to  buy  such  land 
as  it  wants.  There  will  be  no  haggling  about 
the  price.  Each  owner  will  set  his  own  price 
before  a  given  date  by  recording  it  in  the  local 
record.  This  price  will  be  a  perpetual  option 
and  will  run  with  the  land.  It  will  be  the  price 
at  which  the  government  will  buy  if  it  buys, 
and  will  be  the  valuation  on  which  the  owner 
will  pay  taxes  until  the  government  exercises 
its  option.  Taxes  will  all  be  on  land,  and  the 
rate,  as  now,  subject  to  increase  or  decrease, 
and  be  payable  in  the  new  money.  Public  util- 
ities will  be  dealt  with  in  the  same  way. 

The  government  will  then  buy  a  cheap  site 
well  located,  make  it  ready  as  a  place  to  do  bus- 
iness by  making  a  safe  harbor,  building  rail- 
road connections  and  all  sorts  of  public  utili- 
ties. It  will  then  invite  manufacturers  to  come 
and  establish  their  business  where  it  will  for- 
ever be  free  from  taxation — nothing  to  pay  but 
ground  rent,  which  they  must  pay  wherever 
they  are  and  pay  taxes  besides.  If  this  were 
done  near  New  York  and  Chicago  those  great 
cities  would  soon  be  stone  quarries,  unless  the 
landlords  themselves  brought  about  the  adop- 
tion of  the  single  tax — as  they  would,  in  order 


THE  PEACEFUL  SOLUTION    161 

to  realize  an  income  from  the  buildings  and 
public  utilities. 

I  am  sure  some  of  my  single  tax  friends 
will  object  to  compensating  the  landlords  even 
in  this  way.  Of  such  objector  I  would  ask: 
"How  shall  we  get  into  circulation  the  volume 
of  natural  money  we  shall  need  and  make  it 
stay  in  circulation  if  we  cancel  as  much  each 
year  as  we  issue?" 

If  we  do  not  have  natural  money  the  inter- 
est rate  must  remain  on  money  and  the  people 
can  have  no  absolutely  safe  and  universal  res- 
ervoir of  saving,  but  must  depend  on  corpora- 
tions; banks  can  never  be  absolutely  sound  in 
principle,  and  above  all,  the  basic  wage  must 
forever  be  changing  in  order  to  give  labor  the 
advance  in  production.  This  could  not  come 
about  except  by  periodical  negotiations  and 
transfers  from  one  employer  to  another.  This 
would  not  only  be  a  source  of  loss  and  inconven- 
ience, but  taking  the  increase  of  productiveness 
by  periodical  steps  of  advance  instead  of  receiv- 
ing it  automatically  from  day  to  day  would 
involve  a  loss  probably  greater  than  the  cost  of 
the  land. 

And  as  "free  labor"  is  land  value,  and  as  all 
the  natural  money  that  is  canceled  will  be  fur- 
nished for  cancellation  by  the  landlords,  what 
ground  of  complaint  is  there? 


162  NATURAL  MONEY 

And  at  the  end  of  the  period  we'll  have  the 
land,  the  money  and  the  public  utilities. 

It  seems  to  me  as  if  the  natural  law  (the 
scientific  synonym  for  Infinite  Wisdom)  has  pro- 
vided this  exit  from  a  situation  which  has  be- 
come intolerable. 

While  I  have  no  tears  for  the  owners  of 
vast  land  values,  neither  have  I  criticism,  for  I 
doubt  not  I  should  have  done  the  same  in  like 
circumstances.  I  am  not  giving  away  the  little 
land  value  I  have. 

For  the  great  mass  of  people  who  have  in- 
vested their  small  savings  in  land  I  have  a  feel- 
ing that  they  ought  not,  near  the  end  of  life's 
productive  period,  be  forced  to  sacrifice  it  to 
introduce  a  system  whose  benefits  they  cannot 
avail  themselves  of. 

Is  it  wise  to  decline  so  obvious  and  easy  a 
settlement  because,  though  decidedly  the  most 
advantageous  to  the  people,  it  is  not  the  most 
objectionable  to  the  landlords? 


XVIII 

ABOUT  GROUND  RENT 

TT  seems  to  me  certain  that  ground  rent  so- 
called  is  not  all  "true"  ground  rent,  just  as 
the  nominal  interest  rate  is  not  all  "true"  interest, 
but  partly  insurance  for  risk  and  a  large  part 
of  the  remainder  simply  the  equivalent  of  mo- 
nopoly investment  profits.  If  ground  rent  is 
partly  payment  for  advantage  of  location  and 
partly  the  power  to  employ  many  persons  at 
less  than  the  natural  wage  because  workers  are 
forced  to  compete  for  employment  and  many 
to  remain  idle,  then,  when  this  competition  of 
workers  ceases  wages  will  go  up  and  rents  fall. 
Ground  rent  is  abnormally  high  also  because, 
by  reason  of  low  wages  and  the  consequent  ina- 
bility of  the  people  to  purchase  all  the  things 
produced,  a  slight  advantage  as  a  "place  to 
sell"  commands  an  abnormally  high  price,  and 
the  same  is  true  of  a  "peculiar"  personal  ability 
to  sell — such  ability  commands  abnormally 
high  wages,  because  it  is  in  the  selling  depart- 
ment that  business  encounters  the  great  obsta- 
cles. It  is  evident  that  when  the  competition 
of  purchase  equals  the  competition  of  sale, 
ground  rents  will  be  much  more  largely  than 

163 


164  NATURAL  MONEY 

now  "for  places  to  make  things,"  instead  of  "for 
places  to  get  rid  of  things." 

Assuming  that  ground  rent  in  its  various 
forms  (ground  rent  so-called  and  annual  fran- 
chise values)  is  six  billions  of  dollars,  it  is  pretty 
safe  to  say  that  two  or  three  billions  of  it  is 
not  "true"  rent;  that  is,  would  not  express  it- 
self as  rent  but  for  disemployment.  It  may  be 
found  that  the  total  amount  of  ground  rent  will 
not  be  changed,  but  that  high  rents  in  the  great 
centers  will  go  down  and  rents  in  other  sections 
rise.  A  proper  adjustment  of  railway  rates 
would,  in  my  opinion,  tend  to  this  result. 

It  may  develop  that  when  all  labor  is  em- 
ployed as  this  system  contemplates,  even  while 
private  ownership  of  the  land  continues,  the 
landlords  will  be  unable  to  take  more  than  a 
small  percentage.  If  they  now  are  able  to  take 
25  per  cent,  it  may  fall  to  15  per  cent.,  10  per 
cent.,  or  even  5  per  cent.  But  suppose  it 
should  stand  at  20  per  cent.  It  may  develop 
that  the  landlords  will  not  be  able  to  retain 
even  "true"  rent.  They  cannot  hold  it  as  prod- 
uce, for  the  produce  will  not  keep.  If  re- 
ceived in  produce  the  produce  must  be  sold,  forc- 
ing prices  down,  which  will  be  to  increase  the 
purchasing  power  of  the  basic  wage.  They  will 
then  have  it  in  money  which  will  yield  them  a 
very  low  rate  of  interest  or  none  at  all.  They 
can  spend  the  money  to  the  extent  of  their  ca- 


THE  PEACEFUL  SOLUTION    165 

pacity  to  consume,  and  by  employing  many  serv- 
ants at  high  wages  can  retain  large  incomes  and 
hold  wages  below  what  they  should  be  by  the 
amount  of  the  true  rent  less  taxes. 

They  can  also  live  sanely  and  save  their  net 
ground  rent  in  the  form  of  cash,  but  their  taxes 
will  be  increasing  as  the  land  is  taken  over  and 
their  accumulations  will  melt  away  in  a  few  gen- 
erations. 

The  present  situation  is  about  as  follows : 

Total  annual  production 25  billions 

Ground    rent 6  billions 

Taxes  other  than  on  land,  and  tribute 

to  special  privilege,  say 3  billions 

Interest,    say 3  billions 

Abnormally  high  cost  of  selling 2  billions 

• 14  billions 


Wages  other  than  abnormally  high 11  billions 

If  all  the  present  taxes  were  on  the  land,  with 
the  proposed  system  of  money  and  employment 
for  all  unemployed  laborers,  the  condition  would 
be  something  like  this : 

Total    production 30  billions 

Ground    rent 6  billions 

Interest,  after  a  few  years,  say 2  billions 

8  billions 

gg  billions 


166  NATURAL  MONEY 

leaving  22  billions  to  be  distributed  as  wages, 
higher  at  the  bottom  and  lower  at  the  top;  no 
pauper  wages  and  no  million  dollars  a  year 
salaries  for  expert  aids  to  plunderers;  not  even 
a  hundred  thousand  a  year  to  a  discredited  cab- 
inet officer. 

And  we  should  have  from  one  to  three  or 
four  billion  dollars'  worth  of  public  utilities 
added  each  year  besides. 

There  is  another  possibility  we  have  not  con- 
sidered. It  is  a  witching  thought  which  I  have 
not  been  able  to  confirm  or  refute — that  inter- 
est and  ground  rent  are  the  two  sides  of  the 
same  phenomenon.  If  this  is  true,  ground  rent 
will  disappear  with  the  disappearance  of  inter- 
est. I  fancy  I  hear  the  ready  refutation,  the 
confident  confutation,  of  the  academic  expound- 
ers of  stereotyped  wisdom:  "It  is  impossible, 
because  we  cannot  eliminate  the  advantages  of 
certain  locations."  That  is  true,  but  if  there 
were  no  title  barriers  to  keep  people  out,  the 
advantageous  places  would  contain  more  people, 
probably  in  exact  proportion  to  the  advantages, 
and  thus  locational  advantage  be  equalized  just 
as  wages  are;  just  as  the  advantages  of  pas- 
ture are  equalized  by  grazing  animals — where 
there  are  no  fences.  This  is  at  least  conceiv- 
able, with  reference  to  farm  lands  for  instance, 
but  not  so  easy  with  reference  to  locations  for 
mercantile  business.  Yet,  even  here,  when 


THE  PEACEFUL  SOLUTION     167 

wages  are  high  and  nobody  fears  for  his  job, 
it  is  conceivable  that  the  help  necessary  to  re- 
alize the  possibilities  of  the  place  may  cut  the 
margin  down  to  wages  of  management.  I  was 
told  by  one  of  the  department  managers  of 
Marshall  Field  &  Co.  that  the  firm  had  7,000 
employes — I  think,  in  the  retail  store  alone. 
The  average  wage  was  probably  at  least  a  dol- 
lar a  day  below  natural  wages,  and  I  doubt 
whether,  were  wages  advanced,  it  would  be  pos- 
sible to  add  even  half  that  sum  to  the  prices 
of  goods  sold.  Even  $3,000  a  day  would  ab- 
sorb the  ground  rent  on  more  than  twenty  mil- 
lion dollars  of  capitalized  land  value. 

We  may  find  that  the  wages  of  management 
will  be  such  as  we  should  now  consider  fabu- 
lous. It  does  not  seem  to  me  anyone  could  be 
found  to  deny  that  Thomas  A.  Edison  has 
earned  anywhere  from  ten  to  a  hundred  million 
dollars,  and  the  same  may  be  said  of  the  in- 
ventors of  the  telegraph,  telephone,  and  other 
great  inventions.  Watt  was  worthy  of  a  billion 
dollars. 

But  not  all  great  inventions  are  material  de- 
vices. John  Wanamaker,  as  the  inventor  of  the 
department  store,  stands  high  among  those  who 
have  taught  the  world  how  to  do  business;  how 
to  live  more  efficiently. 


XIX 

INTRODUCING  SYSTEM  IN  THE 
UNITED  STATES 

TT  is  evident  that  as  society  develops  econom- 
•*•  ically  and  ethically  the  hours  of  lahor  nec- 
essary for  subsistence  will  become  shorter,  yet 
the  product  will  be  larger  and  larger.  When 
men  in  a  state  of  freedom  shorten  their  hours 
of  labor  it  is  because  the  product  of  the  shorter 
time  is  larger  than  the  former  product  of  long- 
er time,  for  it  is  evident  that  when  a  free  man 
habitually  stops  work  at  the  end  of  ten  hours 
it  is  because  he  desires  rest  or  diversion  more 
than  he  desires  the  product  of  another  hour's 
work.  Later  he  is  able  to  produce  more  and 
habitually  stops  work  at  the  end  of  nine  hours, 
for  the  same  reason — he  desires  rest  or  recre- 
ation more  than  he  desires  the  product  of  an- 
other hour's  work.  But  at  the  end  of  nine  hours 
he  does  not  desire  rest  so  intensely  as  he  for- 
merly did  at  the  end  of  ten  hours,  and  the  in- 
ducement to  work  another  hour  now  (his  prod- 
uct) is  larger  than  formerly  at  the  end  of  ten. 
Therefore  the  product  of  nine  hours  now  must 
be  considerably  larger  than  the  product  of  ten 
hours  formerly  was.  The  free  time  he  has  gained 

he  will  devote  in  part  to  amusement,  in  part  to 

lea 


THE  PEACEFUL  SOLUTION    169 

reading  and  visiting  friends,  and  some  part  lie 
will  devote  to  work,  the  results  of  which  are  of 
a  more  permanent  character — repairing  or  en- 
larging his  house,  putting  in  conveniences  of  va- 
rious kinds,  laying  walks,  etc.,  etc.;  and  if  there 
is  a  little  community  of  such  persons  with  some 
development  of  community  spirit  they  will  make 
improvements  for  the  common  good — roads, 
school  houses,  water  systems,  telephone  systems, 
etc.,  etc. 

But  suppose  they  do  not  so  use  their  time. 
Suppose  they  should  spend  it  in  lounging  about 
places  of  questionable  if  not  positively  bad  char- 
acter. Some  will  do  this,  and  to  the  extent  it 
is  done  they  will  forfeit  the  freedom  gained ;  will 
relapse  into  deserved  slavery  and  go  on  their 
way  to  extinction  by  nature's  wise  law,  "the  sur- 
vival of  the  fittest,"  being  superseded  by  higher 
types.  A  generation  or  two  will  show  even 
greater  in  moral  than  in  economic  advance.  If 
we  invite  higher  characters,  succeeding  genera- 
tions will  show  that  they  have  come.  Let  us 
"prepare  a  place"  for  them  with  all  confidence 
that  the  race  will  fit  the  environment.  There  are 
no  mistakes  in  the  external  management  of  a 
world. 

A  nation  is  simply  an  aggregation  of  com- 
munities, of  individuals,  and  a  percentage  of 
the  "free  labor"  will  always  find  expression  in 
public  utilities  if  given  the  opportunity.  In- 


170  NATURAL  MONEY 

deed,  as  the  right  development  of  humanity 
must  tend  more  and  more  to  the  ethical,  the 
esthetic  and  altruistic,  it  is  evident  that  the  "free 
labor"  will  tend  more  and  more  to  public  ex- 
pression, which,  while  it  is  for  self  is  also  for  all; 
and  not  only  for  all  now  living,  but  for  genera- 
tions yet  unborn;  for  all  time,  for  though  high- 
ways and  other  public  works  are  not  actually 
everlasting,  the  higher  standard  of  life  is  ever- 
lasting except  for  a  social  catastrophe  that  is 
almost  inconceivable. 

The  proposed  money  is  therefore  not  only 
the  natural  money,  but  its  adoption  would  give 
opportunity  for  permanent  and  practical  ex- 
pression of  the  abundant  philanthropy  now 
groping  in  the  dark  for  some  way  to  help  hu- 
manity. It  is  generally  understood  that  the 
only  real  help  of  a  permanent  character  is  to 
give  opportunity,  but  the  way  is  not  clear. 

It  is  not  obvious  that  a  great  nation  like  the 
United  States,  made  up  of  governments  with- 
in governments,  could  do  without  serious  dis- 
turbance that  which  is  easy  and  simple  for  a 
small  community.  It  is  therefore  important 
to  outline  a  specific  plan  by  which  the  system 
could  be  introduced  without  interruption  of  the 
business  of  the  country. 

We  are  now  using  coin,  and  paper  based  on 
coin  and  government  bonds.  Let  a  constitutional 
amendment  be  adopted  providing  that  the  new 


THE  PEACEFUL  SOLUTION    171 

system  of  money  shall  become  operative  on  a 
given  early  date,  the  present  currency  to  retain 
its  status  for  a  short  period,  say  a  year  or  two 
years,  until  which  date  taxes  may  be  paid  either 
in  the  new  or  the  old  money. 

Let  the  government  have  plans  made  for  a 
million  miles  of  highway,  the  finished  cost  of 
which  will  be  not  less  than  $10,000  the  mile,  a 
total  of  ten  billions  of  dollars,  and  let  plans  be 
made  on  a  similar  scale  for  irrigation  and  drain- 
age. 

Let  it  begin  the  prosecution  of  this  work  in 
every  state  and  in  many  or  several  counties  of 
each  state,  employing  all  common  laborers  who 
apply  at  $2.00  per  day  each,  and  as  many  skilled 
laborers  as  are  needed  at  such  prices  as  are  nec- 
essary to  secure  the  required  number;  all  to  be 
paid  in  legal  tender  certificates. 

Let  the  government  establish  a  national  bank 
in  Washington,  the  only  bank  of  issue,  with  a 
branch  in  each  state,  which  branches  will  be 
sub-treasuries.  For  local  banks,  they  may  be 
private,  state  or  national. 

All  improvements  would  be  charged  to  the 
state  in  which  they  were  located,  possibly  with 
some  exceptions,  together  with  its  proportion  of 
administrative  expense  and  general  expenses  of 
a  national  character,  such  as  the  Panama  Canal, 
army  and  navy.  This  only  for  the  beginning,  for 
when  the  proper  system  of  taxation  shall  have 


172  NATURAL  MONEY 

been  established  there  will  be  no  difficulty  about 
the  apportionment.  Even  in  the  beginning  it  may 
be  advisable  to  adopt  the  ultimate  plan,  which 
would  be  a  uniform  proportion  of  the  total  tax 
levy  in  each  state,  though  I  am  of  the  opinion 
there  should  be  a  minimum  based  on  the  popula- 
tion, and  sufficiently  high  to  insure  the  proper 
prosecution  of  such  work  as  is  interstate  in 
character. 

The  local  taxing  authorities  would  raise  all 
revenue  from  land  values.  It  would  be  paid  at 
first  in  the  old  currency,  which  of  course  would 
not  be  paid  out,  but  would  be  superseded  by  the 
new.  All  the  taxes  in  each  state  would  be  raised 
by  the  local  taxing  bodies,  and  all  except  that 
for  local  expenses  be  sent  to  the  national  bank 
at  the  state  capital,  a  United  States  sub-treas- 
ury, and  any  additional  -part  of  the  levy  paid 
in  the  old  currency  would  also  be  sent  to  be  ex- 
changed for  the  new.  The  sub-treasury  would 
retain  the  portion  to  be  spent  in  the  state  by 
the  national  government  and  forward  the  re- 
mainder to  Washington  or  hold  it  subject  to 
check.  Such  of  this  as  was  required  for  adminis- 
trative and  general  purposes  would  be  used  by 
the  national  government,  the  remainder  going 
to  pay  for  national  improvement  within  the 
state,  together  with  as  much  additional  issue  as 
the  current  year's  work  might  require. 

That  part  of  the  total  tax  levy  spent  by  the 


THE  PEACEFUL  SOLUTION    173 

•state  for  local  and  state  purposes  would  not 
bring  about  any  cancellation  of  certificates,  only 
that  returned  to  the  general  government  would 
affect  the  volume  of  currency,  and  of  course 
these  would  be  issuing  more  rapidly  than  they 
would  be  coming  in,  for  the  reason  that  "free 
labor"  is  ground  rent,  and  ground  rent  may 
not  be  all  of  "free  labor,"  whereas  taxes  are  only 
a  portion  of  ground  rent.  It  is  certain  that  for 
many  years  the  issue  would  exceed  the  cancella- 
tion, probably  by  two  to  one,  but  whatever  the 
proportion,  there  can  be  no  difficulty  because  the 
volume  of  currency  will  expand  only  so  long  as 
it  is  absorbed,  and  when  it  is  too  much  to  be 
absorbed  the  expansion  will  cease. 

The  various  states  would  soon  inaugurate  the 
land  value  tax  in  such,  form  as  ultimately  to  take 
whatever  per  cent,  of  the  annual  land  values 
ought  to  be  taken,  and  of  this  total,  specified  por- 
tions would  go  to  the  local,  state  and  general 
governments.  The  proportion  to  the  general 
government  would  then  be  the  only  question, 
and  this  would  probably  be  in  proportion  to  the 
population  for  national  administration  expenses, 
and  a  uniform  proportion  of  the  total  levy  for 
other  national  expenses  not  chargeable  locally. 

Take  such  an  expense  as  the  cost  of  the  Pan- 
ama Canal;  if  it  were  paid  out  of  the  general 
fund  raised  by  taking  a  uniform  per  cent,  of 
the  total  ground  rent  in  each  state  it  would  be 


174  NATURAL  MONEY 

equitable,  because,  in  the  first  instance  it  is  paid 
for  simply  by  issuing  certificates  that  circulate 
as  money.  For  greater  clearness  let  us  consider 
it  as  an  extra  undertaking  in  addition  to  the 
usual  amount  of  work.  Its  building  would  thus 
expand  the  circulation  beyond  the  requirements 
of  trade  and  reduce  the  purchasing  power  of  the 
certificates.  This  would  throw  the  burden  upon 
everybody,  and  the  burden  would  continue  upon 
all  the  people  until  the  process  of  shrinking  the 
currency  to  the  normal  volume  should  be  accom- 
plished. 

But  the  payment  of  taxes  by  which  the  shrink- 
ing is  to  be  accomplished  is  in  proportion  to  the 
ground  rent,  and  if  one  place  is  benefited  by  the 
canal  more  than  another,  the  benefit  will  show 
in  ground  rent  and  that  place  will  contribute  to 
the  cancellation  in  proportion  to  its  advantage ;  if 
not  to  this  identical  expense,  at  least  later  its 
taxes  will  be  greater. 

Let  us  compare  this  method,  as  it  relates  to 
government  work,  with  the  method  now  in  use. 
It  is  hardly  proper  to  speak  of  it  as  a  compari- 
son, for  to  think  of  the  present  method,  with  its 
log-rolling,  in  which  principle  is  sacrificed  to 
personal  and  local  interests  to  secure  appropri- 
ations for  river  and  harbor  improvements,  gov- 
ernment buildings,  and  other  forms  of  local  fa- 
vor, is  to  deplore  it.  The  scandal  of  these  things 
is  as  notorious  as  the  same  influence  in  tariff  and 


THE  PEACEFUL  SOLUTION     175 

financial  legislation,  and  is  more  tolerable  only 
as  an  occasional  burglary  or  bank  robbery  is 
more  tolerable  than  continual  and  widespread 
pilfering,  whereby  the  people  are  robbed  of  half 
the  fruit  of  their  labor.  These  appropriation 
bills  are  aptly  described  as  raids  on  the  treasury, 
and  many  a  congressman  who  would  much  rather 
stand  for  honest  legislation,  yields  to  pressure  in 
order  to  satisfy  constituents  who  are  clamorous 
to  share  in  the  loot. 

When  each  section  pays  for  all  it  gets  and  gets 
all  it  pays  for  there  will  be  no  log-rolling  in  con- 
gress or  in  legislatures;  no  shameless  bargaining, 
and  selling  of  votes — and  no  licenses  will  issue 
to  favored  interests  under  the  pseudonym  of  a 
tariff  to  rob  the  people  at  large  for  the  benefit 
of  a  few. 


XX 

A  RESERVOIR  OF  LABOR 

"VTOT  the  least  benefit  of  the  system  will  be 
^  that  the  public  work  will  serve  as  a  reser- 
voir into  which  all  labor  having  irregular  private 
employment  will  flow  (thus  saving  an  enormous 
waste),  and  from  which  private  employers  can 
always  command  labor  for  extra  work,  such  as 
cultivating  and  harvesting  crops,  at  ^hich  time, 
especially  at  harvest,  there  is  always  a  dearth 
of  help.  During  the  busy  farming  season  I 
fancy  public  work  in  distinctively  agricultural 
sections  will  be  almost  suspended,  and  during 
the  other  parts  of  the  year  will  command  not 
only  the  services  of  farm  laborers,  but  of  a  large 
proportion  of  the  farmers  themselves.  And  this 
is  not  only  true  of  farm  laborers,  but  of  others 
whose  work  is  of  an  intermittent  character. 
There  are  doubtless  many  skilled  workmen  who 
would  be  glad  to  fill  in  their  idle  time  at  a  lower 
wage  than  they  command  at  their  trades,  and  I 
imagine  that  a  dairy  could  be  run  with  much 
greater  economy  if  the  men  employed  could  earn 
something  on  the  side.  To  save  such  labor  from 
waste  it  should  be  arranged  to  utilize  from  two 
hours  a  day  up,  but  only  where  the  private  em- 
ployment is  bona  fide ;  and  such  hour  work  should 

176 


THE  PEACEFUL  SOLUTION     177 

be  paid  for  in  certain  totals  or  at  the  end  of  the 
month,  lest  improvident  persons  be  disposed  to 
work  only  in  a  shiftless  way. 

I  believe  it  would  be  safe  to  say  that  most 
farmers  and  farm  laborers  would  find  from  fifty 
to  one  hundred  days  each  year  to  devote  to  pub- 
lic work.  Assume  that  five  millions  of  them 
would  spend  an  average  of  fifty  days  each  per 
year.  This  would  be  250  million  days  a  year, 
$500,000,000,  that  is  now  well  nigh  wasted.  It 
would  build  50,000  miles  of  road  at  $10,000  the 
mile,  or  250,000  miles  at  $2,000  the  mile.  It  is 
probable  roads  would  not  be  built  complete  at 
once,  but  first  a  f oundational  road,  to  be  finished 
in  a  term  of  five,  ten  or  twenty  years.  If  in 
twenty  years,  the  amount  of  farm  labor  assumed 
would  complete  one  million  miles. 

Objection  may  be  made  that  this  would 
advance  the  price  of  farm  labor  to  such  extent 
as  to  work  a  hardship  on  the  farmer.*  Prob- 
ably there  would  be  some  advance,  but  it  would 
be  compensated  in  two  ways: 

The  farmers  and  their  teams  would  find  prof- 


*This  objection  could  not  issue  with  either  grace  or  force 
from  those  partisan  statesmen  whose  chief  political  capital  is 
assurance  of  high  wages  to  workmen  and  assurance  of  high 
prices  to  manufacturers.  The  manufacturer  realizes  the  high 
prices  through  the  protective  tariff,  and  the  laborer  is  left  to 
wonder  why  the  indirect  method  by  which  his  benefit  was  to 
accrue,  does  not  work  according  to  the  theory. 


178  NATURAL  MONEY 

itable  employment,  and  the  farm  hands  would 
pay  their  board  during  the  time,  say  at  four 
dollars  a  week.  So  if  a  farmer  kept  two  men 
the  year  round  at  $2.00  a  day  less  $4.00  a  week 
his  bill  for  help  would  be  $16.00  a  week,  say  for 
thirty-three  weeks,  $528.00.  If  he  and  his  three 
teams  worked  fifty  days  at  the  price  of  four 
men,  that  would  be  $400.00  to  his  credit,  and 
$8.00  a  week  for  board  for  eight  and  one-third 
weeks  would  be  $66.66,  making  $466.66,  or 
$61.34  net  money  outlay  for  396  days  of  work. 

In  addition  to  this  he  would  soon  have  more 
efficient  work  on  the  farm,  because  the  public 
service  would  tend  to  develop  a  higher  class  of 
workers;  that  is  to  say,  more  versatile  and  effi- 
cient workmen. 

It  would  also  equalize  wages  all  over  the 
country,  and  make  for  a  steady  market,  not  only 
because  wages  would  be  equalized,  but  because 
the  purchasing  power  of  the  people  would  be  in- 
creased by  reason  of  steady  employment  at  good 
wages,  and  because  there  would  be  none  of  the 
recurring  collapses  we  now  have,  the  effect  of 
which  is  so  to  demoralize  markets  as  to  keep 
them  upset  for  years  at  a  time  and  make  the  re- 
wards of  production  largely  a  matter  of  chance. 
I  know  a  man  who,  about  sixteen  years  ago,  had 
a  considerable  quantity  of  corn  which  he  failed 
to  sell  at  48  or  49  cents  a  bushel,  thinking  he 
would  be  able  to  get  50  cents.  He  still  had  it  the 


THE  PEACEFUL  SOLUTION    179 

next  year  when  corn  was  selling  at  16  cents  a 
bushel  delivered  at  the  railway  station.  Since  that 
time  it  has  been  as  high  as  78  cents  in  the  same 
locality  and  possibly  higher.  How  much  better 
it  would  be  if  the  market  were  steady  at  a  fair 
price.  The  same  is  true  of  every  product.  Cot- 
ton has  recently  sold  at  8  cents,  which  I  am  told 
is  below  the  cost  of  production.  I  do  not  claim 
that  anything  can  keep  the  price  of  a  super- 
abundant product  from  falling  if  the  supera- 
bundance continues,  but  continued  abundance  at 
a  low  price  indicates  that  the  price  is  high  enough 
— is  not  low.  Under  an  interest  rate  of  one  or 
two  per  cent,  a  temporary  superabundance,  such 
as  we  now  have  of  cotton  (1911),  would  be  held 
over  in  part  if  the  price  fell  more  than  the  total 
of  interest,  insurance,  storage  and  shrinkage. 
Suppose  that  12%  cents  is  a  fair  price  for  cotton; 
that  insurance,  storage  and  shrinkage  amount  to 
5  per  cent,  of  the  value  and  that  interest  on 
money  loans  has  disappeared  except  for  1  per 
cent,  to  the  banker.  Six  per  cent,  of  12%  cents 
is  3/4  of  a  cent.  Cotton  would  then  be  held  over 
in  part  if  it  fell  below  11%  cents  a  pound. 

But  why  should  not  the  price  of  a  product  be 
about  inversely  proportioned  to  its  abundance? 
Assuming  the  same  labor  in  producing  the  larger 
crop  from  the  same  acreage,  the  total  value 
should  be  substantially  the  same,  for  nature's 
bounty  should  inure  to  the  benefit  of  all.  But  it 


180  NATURAL  MONEY 

is  not  so  in  present  conditions.  Markets  are  so 
uncertain  that  a  20  per  cent,  increase  is  likely  to 
reduce  the  price  30,  40  or  50  per  cent.  This  is 
because  the  purchasing  power  of  the  mass  of 
people,  not  being  equal  to  their  productive 
power,  the  competition  of  sale  is  so  much  keener 
than  the  competition  of  purchase,  and  this  con- 
dition must  continue  until  we  have  natural 
wages.  Then  markets  will  be  as  steady  as  vary- 
ing natural  conditions  will  permit. 

The  change  will  not  be  accomplished  in  a 
single  year,  but  the  balancing  of  production  and 
consumption  will  almost  certainly  be  accom- 
plished in  ten  or  fifteen  years. 


THE  RIGHT  OF  GOVERNMENT, 

TT  is  a  favorite  fallacy  of  near-statesman  that 
A  "the  best  government  is  the  one  that  governs 
least."  This  is  all  the  more  dangerous  because 
there  is  so  much  truth  in  it  as  applied  to  the 
governments  we  have.  In  the  sense  in  which  "to 
govern"  is  commonly  used,  meaning  to  domin- 
ate, to  coerce,  it  is  true.  "Govern"  is  from  the 
Greek  word  meaning  "to  steer  a  ship,"  and  as 
the  duty  of  a  ship's  pilot  is  not  merely  to  avoid 
the  breakers  and  shoals,  but  "to  get  somewhere," 
so  it  is  the  duty  of  governments  not  only  to  re- 
strain people  from  infringing  the  rights  of  others 
and  to  defend  against  invasion,  but  to  do  things; 
to  do  a  lot  of  things;  to  do  everything  for  the 
common  welfare  which  cannot  be  accomplished 
by  individuals  except  by  a  grant  of  governmen- 
tal power. 

Because  all  governments  have  been  unjust, 
the  question  as  to  the  source  and  scope  of  govern- 
mental authority  has  been  much  discussed,  but 
not  settled.  Until  recently  there  has  been  no 
distinct  line  of  demarcation,  but  since  the  elder 
George  breathed  life  into  political  economy  and 
made  it  a  living  fountain  of  political  wisdom 
there  is  no  excuse  for  anyone  to  remain  in  ig- 


181 


182  NATURAL  MONEY 

norance  of  the  main  functions  of  government. 

But  even  with  this  broad  statement  that  "gov- 
ernment should  preserve  the  peace  by  restraining 
peace  breakers,  and  do  the  things  needful  for 
the  community  welfare  which  individuals  cannot 
do  without  a  delegation  of  governmental  power," 
there  is  still  room  for  much  divergence  of  opinion. 
The  anarchist  contends  that  all  these  things  will 
be  done  as  well  or  better  without  government, 
and  it  is  impossible  to  prove  he  is  wrong  except 
by  a  trial,  which  most  of  us  believe  would  be  a 
costly,  if  not  dangerous  experiment.  Anyway, 
we  are  not  willing  to  try  it.  It  is  therefore  de- 
sirable to  establish  the  right  of  government  on 
a  basis  so  firm  that  even  the  anarchist's  objec- 
tion can  have  no  weight. 

My  contention  is  that  we  have  a  natural,  or 
divine  right  to  do  things  wrongly.  We  find 
ourselves  in  a  world  where  action  is  necessary  to 
life,  but  we  have  not  the  wisdom  to  act  perfectly; 
that  is,  in  harmony  with  the  natural  laws  under 
which  we  live;  rightly.  The  demands  of  life  will 
not  permit  us  to  delay  action  until  we  can  learn 
the  rule  of  right  action;  in  fact,  we  learn  the 
rules  of  right  conduct  largely  by  experience,  by 
noting  the  ill  effects  of  wrong  conduct.  Rela- 
tions involving  the  welfare  of  many  persons  are 
so  complex  that  we  learn  the  rules  of  right  ac- 
tion very  slowly  even  by  experience,  and  as  there 
are  thousands  of  wrong  ways  to  do  even  a  simple 


THE  PEACEFUL  SOLUTION    183 

thing  and  usually  only  one  perfect,  or  right,  way 
to  do  it,  it  is  absolutely  certain  that  in  every 
series  of  actions  relating  to  a  complicated  matter 
we  shall  go  wrong  in  one  or  more  of  the  steps. 
Wherefore  either  it  is  our  duty  not  to  act,  know- 
ing that  we  shall  act  wrongly,  or  it  is  our  duty 
to  act  in  spite  of  the  fact  that  we  shall  act 
wrongly.  It  is  needless  to  argue  that  we  have  a 
right  to  do  our  duty,  though  it  is  certain  we  shall 
fail  of  doing  it  perfectly. 

Right  action  in  the  practical  sense,  in  a  "go- 
ing" evolution  scheme,  consists  in  doing  as  well 
as  we  know  and  in  correcting  mistakes  as  rapidly 
as  we  learn  a  better  way.  For  practical  purpos- 
es, then,  the  only  wrong  is  persistence  in  error, 
in  wrong  doing  after  it  is  known  to  be  wrong. 
We  all  know  now  that  chattel  slavery  is  wrong, 
and  most  people  look  upon  it  with  horror,  yet 
comparatively  few  realize  that  we  have  an  indus- 
trial slavery  the  horrors  of  which  are  tenfold — 
a  hundredfold — those  of  African  slavery  before 
the  war  of  the  states.  The  monopoly  ownership 
of  land;  that  is,  individual  ownership  upon  such 
terms  as  to  give  title  holders  the  unearned  incre- 
ment, is  more  fruitful  of  vice,  crime  and  misery 
in  the  world  today  than  all  other  causes  com- 
bined. It  is  the  fundamental  wrong  in  which 
nearly  all  other  wrongs  are  grounded.  War, 
vices  of  all  sorts,  including  the  social  evil,  the 
white  slave  traffic,  intemperance  and  minor  evils, 


184  NATURAL  MONEY 

would  vanish  in  large  part  like  a  summer  cloud 
if  the  land  were  freed. 

Yet  private  ownership  of  the  land  was  one  of 
the  greatest  steps  forward  in  the  world's  history; 
was  right  and  proper.  It  would  have  been  even 
better  if  men  had  been  wise  enough  to  make  the 
tenure  what  we  are  now  seeking  to  make  it,  but 
it  is  almost  inconceivable  that  men  could  have 
been  so  wise  as  to  provide  against  the  conditions 
that  have  now  developed. 

The  wrong  is  not  in  having  made  a  mistake  as 
to  land  tenure ;  that  mistake  was  inevitable.  The 
immoral,  criminal  conduct  is  persistence  in  the 
error;  seeking  to  perpetuate  the  mistake  for  the 
purpose  of  retaining  an  unfair  advantage. 

The  point  to  which  I  am  proceeding  is  this — • 
that  nobody  can  now  define  all  that  a  govern- 
ment may  properly  do.  We  know  some  of  the 
things,  and  can  state  them  with  a  much  nearer 
approach  to  definiteness  than  was  possible  half  a 
century  ago.  So  far  as  our  formulation  is  defi- 
nite it  is  fairly  well  covered  in  the  statement  that 
the  government  should  preserve  the  peace,  de- 
fend against  invasion  and  do  all  those  things  for 
the  general  welfare  requiring  the  exercise  of  gov- 
ernmental power  for  their  accomplishment. 

But  by  what  method  of  procedure  shall  it  act? 
The  ready  answer  is,  "by  vote  of  majority,"  but 
we  all  deny  the  right  of  the  majority  to  rule  the 
individual  in  certain  matters.  "Well  then  it  may 


THE  PEACEFUL  SOLUTION    185 

rule  by  vote  of  majority,  but  only  in  things 
proper  for  government  to  do."  Who  shall  de- 
fine the  proper  field? 

May  it  properly  prevent  a  man  from  getting 
drunk?  The  answer  may  be,  "yes,  in  public,  but 
not  in  his  home." 

May  it  properly  prevent  him  from  smoking? 

May  it  properly  prevent  him  from  chewing  to- 
bacco? 

May  it  properly  force  him  to  take  up  arms  and 
fight? 

Even  if  these  questions  all  be  answered  satis- 
factorily, still  we  shall  come  to  some  doubtful 
point,  wherefore  it  seems  to  me  the  sound  posi- 
tion is  that  we  have  a  right  to  deal  with  all 
questions  as  they  arise  in  the  best  way  we  know 
or  can  devise.  We  shall  probably  adopt  many 
wrong  ways  before  we  reason  out  or  chance  upon 
the  right  way,  but  it  is  weak  to  refuse  to  act  be- 
cause we  may  make  a  mistake. 

Personally  I  do  not  believe  it  best  to  collect 
taxes  (ground  rent),  by  force,  but  I  am  willing 
to  do  it  by  force  until  we  can  learn  the  better 
way.  I  do  not  believe  the  minority  is  bound  by 
the  fiction  of  "consent,"  but  I  am  willing  to  pro- 
ceed with  majority  rule  until  we  learn  how  to 
have  actual  consent  of  the  minority  and  thus 
bind  them  in  fact  and  not  in  fiction.  I  would 
make  citizenship  a  matter  of  expressed  consent 
and  agreement;  would  initiate  everyone  who  ar- 


186  NATURAL  MONEY 

rives  at  the  proper  age,  with  due  ceremonies,  but 
not  secretly,  administering  the  oath  of  loyal  sub- 
mission to  the  will  of  the  majority  in  all  matters, 
but  leaving  him  free  to  withdraw  at  any  time. 
If  some  individuals  were  not  willing  to  become 
citizens  they  would  be  "foreigners  to  the  govern- 
ment," having  no  standing  in  the  courts.  If 
such  persons  were  already  in  possession  of  some 
land  and  using  it  I  should  not  disturb  them  nor 
even  permit  them  to  pay  taxes.  They  could  not 
realize  any  considerable  ground  value  except  the 
citizens  freely  gave  it  to  them,  and  if  the  citizens 
did  this  they  would  be  estopped  to  complain.  I 
would  even  allow  such  persons  the  use  of  the 
roads  and  other  public  utilities  on  the  terms  open 
to  all,  until  forbidden,  and  let  their  children  at- 
tend the  public  schools  without  charge.  The 
next  generation  would  be  citizens. 

Opposition  to  beneficence  cannot  long  con- 
tinue where  it  is  not  opposed. 

Even  the  anarchist  cannot  logically  object  to  a 
voluntary  governmental  organization. 

But  this  is  for  the  distant  future.  For  the 
present  we  must  be  content  to  do  as  well  as  a 
majority  can  be  brought  to  favor,  or  at  least 
sanction,  remembering  always  that  we  should  go 
forward  when  we  are  sure  of  the  way;  that  we 
should  act  when  action  is  needed,  even  at  the 
risk  of  making  mistakes;  that  we  should  always 
be  ready  to  undo  obvious  mistakes,  and  that  we 


THE  PEACEFUL  SOLUTION    187 

should  not  be  without  some  patience  with  those 
who  are  still  dominated  by  selfishness  and  ap- 
pear to  be  incapable  of  action  involving  an  ap- 
parent sacrifice.  We  are  all  selfish  in  some  de- 
gree, hence  are  estopped  to  pass  harsh  judg- 
ment on  those  whose  selfishness  is  different  from 
or  a  little  more  intense  than  our  own.  The 
Perfect  One  may  not  see  the  difference  so  large 
as  we  imagine  it. 

Consider  the  intemperance  evil,  for  instance. 
No  one  will  deny  that  it  is  a  very  grave  ques- 
tion and  should  be  dealt  with.  Evidently  we 
do  not  know  how  to  deal  with  it,  but  shall  we 
do  nothing  because  we  do  not  know  the  perfect 
mode  of  action?  This  savors  of  avoiding  the 
water  till  we  have  learned  to  swim.  Let  us 
do  the  best  we  know  and  by  our  failures  learn 
a  better  way;  or,  better  still,  let  us  do  that 
which  we  do  know  how  to  do ;  which  we  know  is 
even  more  important  than  curing  intemperance, 
then  we  may  find  intemperance  and  all  other 
vices  easier  to  deal  with.  We  may  find  they  are 
more  largely  an  effect  than  a  cause. 

It  seems  to  me  this  is  almost  axiomatic:  In 
the  home,  government  should  never  intrude  ex- 
cept upon  call  of  an  inmate  or  well  founded 
suspicion  of  crime.  The  private  life  is  sacred 
and  not  to  be  invaded.  Even  production  by 
the  individual  is  private  save  in  exceptional 
cases,  but 


188  NATURAL  MONEY 

Exchange,  sale,  is  public,  and  subject  to  pub- 
lic control.  It  is  communal  in  its  nature,  grow- 
ing out  of  the  very  foundation  of  community  co- 
operation (the  division  of  labor).  I  am  not 
sure  but  that  the  community  (government) 
might  properly  take  full  charge  of  exchanges, 
but  as  we  have  not  arrived  at  the  point  where 
we  are  even  considering  this,  wise  governments 
will  be  chary  of  exercising  control,  and  confine 
it  to  wholesome  regulation  without  favor.  By 
way  of  illustration:  Our  local  governments, 
many  of  them,  have  occupation  taxes  designed 
to  be  a  source  of  revenue.  This  is  unwise,  but 
a  license,  which  should  be  free  or  for  only  a 
nominal  charge,  may  properly  be  required  in 
order  that  a  record  may  be  kept  and  full  in- 
formation be  obtainable.  In  a  government 
where  consent  is  actual,  including  consent  to 
abide  by  the  decision  of  the  majority,  no  ques- 
tion could  ever  arise  as  to  the  authority  of  the 
government.  The  question  would  be  on  the  wis- 
dom of  a  proposed  course,  and  when  the  opin- 
ions of  the  people  find  easy  and  prompt  ex- 
pression, there  need  be  no  fear  of  persistence 
in  any  unwise  course.  Politicians  defend  po- 
sitions for  the  sake  of  consistency  and  for  fear 
to  change;  from  uncertainty  as  to  what  the  peo- 
ple want,  and  to  save  the  humiliation  of  admit- 
ting error,  but  the  people,  though  not  entirely 
free  from  these  influences,  are  less  subject  to 


THE  PEACEFUL  SOLUTION    189 

them  because  each  individual  is  less  conspicuous. 
They  are  therefore  better  able  to  "act  in  the 
living  present"  and  "let  the  dead  past  bury  its 
dead." 


XXII 

'BANKING 

TF  there  is  a  natural  system  of  taxation,  as 
was  proved  by  the  elder  George  more  than 
thirty  years  ago,  and  a  natural  system  of  money, 
as  I  have  shown,  there  must  be  a  natural  sys- 
tem of  banking  if  banking  is  necessary  to  the 
highest  economic  development,  as  all  will  agree 
it  is. 

It  is  a  universally  known  fact  that  no  com- 
mercial bank  is  prepared  to  meet  its  obligations 
should  a  large  proportion  of  its  depositors  at 
once  exercise  their  right  to  demand  payment. 
Ordinarily  there  is  no  danger  of  such  simultane- 
ous demand,  but  it  does  come  periodically,  and 
then  the  banks  arbitrarily  violate  the  terms  of 
agreement  with  depositors  and  refuse  payment. 

I  think  this  is  a  wise  course,  but  the  necessity 
for  doing  it  indicates  either  that  the  banking 
system  or  the  money  system  is  wrong,  or  that 
they  are  both  wrong. 

In  the  foregoing  pages  I  have  shown  that 
the  volume  of  the  proposed  system  of  currency 
may  expand  until  all  large  mercantile  transac- 
tions are  on  a  strictly  cash  basis,  and  the  small- 
er ones — retail  business — either  spot  cash  or 
with  weekly  and  monthly  settlements.  Except 

190 


THE  PEACEFUL  SOLUTION    191 

for  table  supplies  I  do  not  see  that  there  would 
be  any  inconvenience  in  a  strictly  cash  system, 
and  it  would  effect  an  enormous  saving  in  the 
keeping  and  collecting  of  accounts.  But  of 
this  we  may  be  sure:  experience  will  soon  show 
the  limit  of  economy  in  the  extension  of  credit. 
It  is  evident  that  the  milkman  can  better  afford 
an  occasional  loss  than  to  take  time  to  collect 
every  day,  and  the  same  may  be  true  in  less  de- 
gree of  the  family  grocer,  yet  even  the  milkman 
could  do  a  cash  business  without  inconvenience 
by  selling  tickets  or  books,  as  the  icemen  do. 

But  if  business  is  generally  cash,  even  with 
some  exceptions,  instead  of  from  30  days  to  six 
months,  the  volume  of  money  required  will  be 
enormously  increased  and  the  volume  of  credit 
correspondingly  decreased. 

Credit  now  constitutes  about  85  per  cent,  of 
what  the  banks  deal  in,  and  loan,  and  under 
the  cash  system  the  demand  for  loans  will  soon 
be  largely  reduced.  The  transition  would  be 
gradual,  requiring  from  twenty-five  to  fifty 
years,  or  even  longer,  but  I  think  it  would  cer- 
tainly come.  To  the  extent  that  a  cash  sys- 
tem would  require  a  larger  volume  of  money  it 
would  necessarily  be  as  gradual  in  coming  about 
as  was  the  expansion  of  volume. 

In  my  opinion  the  volume  will  reach  fifty  to 
seventy-five  billions  in  fifty  years  (it  may  be 
many  times  more,  for  the  population  will  prob- 


192  NATURAL  MONEY 

ably  double),  and  very  naturally  the  question 
will  be  asked,  "what  has  the  volume  of  money 
to  do  with  banking?" 

This;  that  when  business  is  practically  on  a 
cash  basis  the  savings  of  the  people  will  be 
largely  in  cash,  and  not  as  now,  almost  wholly 
in  credit.  It  will  be  cash  in  banks,  for  we  shall 
have  abundant  need  of  banks,  not  only  as  cus- 
todians of  cash  savings,  but  for  transfer  of  cred- 
its from  place  to  place,  as  clearing  houses,  and 
also  for  the  convenience  of  payment  by  check. 
They  will  be  the  bookkeepers  for  200,000,000 
people. 

Large  sums  of  money  will  be  loaned,  but  in 
my  opinion  not  ordinarily  borrowed  on  short 
time  by  business  men  as  working  capital.  The 
loans  will  be  for  extensions  and  for  new  enter- 
prises, which  will  be  time  loans.  In  addition  to 
this  there  will  be  tens  of  billions  of  loans,  the 
purchase  price  of  business  transfers;  the  run- 
ning account  of  the  retiring  generation  with 
the  active  one. 

It  will  probably  develop  that  each  bank  will 
be  of  a  dual  character,  having  a  department  for 
checking  deposits  and  another  for  deposits  not 
subject  to  check.  Our  commercial  banks  now 
often  have  savings  departments,  but  a  large  per- 
centage of  the  depositors  are  of  a  different  class 
from  the  commercial  patrons. 

In  the  conditions  I  speak  of  it  is  evident  that 


THE  PEACEFUL  SOLUTION    193 

if  savings  were  largely  in  cash,  almost  every 
business  man  would  do  business  with  both  de- 
partments, putting  his  surplus  in  the  loan  de- 
partment (savings)  to  be  loaned  "not  to  ex- 
ceed" a  specified  time,  and  his  other  funds  on 
deposit  to  check  against.  These  would  never 
be  loaned,  but  as  the  patrons  of  the  commercial 
side  would  also  be  depositors  in  the  savings  side 
they  could  always  borrow  there  for  any  unusual 
requirement  and  thus  be  able  to  keep  their  un- 
loanable  deposits  down  to  the  minimum,  that 
is  to  say,  not  keep  credit  unnecessarily  idle. 

But  under  this  system  it  would  not  be  so  im- 
portant as  it  now  is  to  keep  all  money  invested, 
for,  as  said,  interest  on  money  will  probably 
cease.  The  government  would  have  no  in- 
terest-bearing debt,  nor  any  debt  of  any  kind 
except,  as  before  described,  an  unusual  and 
temporary  expansion  of  the  currency  in  case  of 
war  (there  won't  be  any)  or  an  extraordinary 
work  for  which  labor  had  to  be  "drafted."  All 
labor  that  did  not  come  voluntarily  into  the 
public  service  would  cause  the  issue  of  money 
that  would  practically  be  a  debt  because  it  would 
expand  the  currency  beyond  the  needs  of  trade 
and  reduce  production.  This  would  advance 
prices,  and  as  soon  as  free  to  do  so,  the  extra 
labor  would  shift  back  to  private  employment, 
and  the  currency  contraction  would  set  in.  In 
fact  it  seems  certain  that  for  a  time  correspond- 


194  NATURAL  MONEY 

ing  to  the  time  the  excess  labor  was  in  the 
public  service  there  would  be  a  shift  of  double 
the  number,  or  more,  to  private  employment, 
thus  accomplishing  the  contraction  (paying  the 
debt)  in  a  short  time. 

For  the  benefit  of  those  who  think  that  inter- 
est is  inequitable,  "robbery,"  as  they  often  say, 
I  would  call  attention  to  the  fact  that  even  in 
this  case  interest  is  concealed.  The  longer  hours 
or  lower  subsistence  forced  upon  the  people  dur- 
ing the  excess  of  currency  is  interest  in  disguise, 
for  each  unit  costs  more  in  irksomeness. 

Not  only  this,  but  there  would  be  no  monop- 
oly profits  to  keep  up  the  interest  rate.  It  is 
evident  that  the  nominal  interest  rate  will  al- 
ways be  as  much  as  monopoly  investment  of- 
fers at  the  time  and  place,  and  as  much  more 
as  the  expectation  of  increase  lowers  the  rate 
at  which  monopoly  capitalizes. 

No  one  knows  what  the  real  interest  rate  is. 
By  real  interest  rate  I  mean  the  premium  paid 
for  time,  when  there  is  no  risk  and  no  expec- 
tation of  increase.  As  before  stated,  the  pro- 
posed system  would  reduce  the  nominal  rate 
paid  for  time,  because  the  purchasing  power 
of  the  money  is  constantly  increasing,  wherefore 
the  equivalent  of  interest  is  really  paid  because 
the  loan  is  repaid  in  units  of  enhanced  yalue  as 
compared  with  general  values. 

Banks  conducted  on  the  plan  suggested  and 


THE  PEACEFUL  SOLUTION    195 

under  the  money  system  proposed  could  not  be 
ruined  by  a  rush  of  depositors  for  payment, 
and  yet  there  would  be  no  dearth  of  capital  to 
loan,  would  probably  be  more  than  enough  at 
all  times.  Not  only  will  the  interest  rate  on 
money  probably  disappear,  but  it  is  evident 
that  the  risk  element  will  be  reduced  to  a  mini- 
mum, for  when  there  can  be  no  more  panics  and 
no  involuntary  poverty;  when  wages  are  high 
and  employment  always  to  be  had,  and  when 
the  purchasing  power  of  money  is  constantly 
increasing,  there  will  not  be  the  killing  competi- 
tion there  now  is  in  business  with  its  attendant 
causes  of  failure.  When  we  have  natural 
wages,  even  before  the  full  value  of  the  land  is 
taken  as  taxes,  the  competition  of  purchase  will 
be  almost  as  keen  as  the  competition  of  sale  and 
the  risks  of  business  will  be  practically  elimin- 
ated. If  the  risk  were,  in  the  main,  eliminated 
and  true  interest  (payment  for  time)  should  dis- 
appear, borrowers  would  probably  pay  a  com- 
mission of  one  or  two  per  cent,  to  bankers  for 
the  loan  of  funds,  the  payment  being  for  the 
banker's  judgment  in  verifying  the  soundness 
of  the  loan  and  for  looking  after  it.  In  such  cir- 
cumstances the  owner  of  the  money  would  get 
nothing  except  custodianship  without  cost. 

I  said  interest  on  money  probably  will  disap- 
pear, but  will  really  be  concealed  in  the  increas- 
ing value  of  money;  and  a  distinction  will  arise 


196  NATURAL  MONEY 

between  the  loan  of  money  and  the  loan  of  ac- 
tual wealth.  A  house  occupied  by  a  person 
other  than  the  owner  must  yield  a  net  return 
above  carrying  charges  and  depreciation,  and  a 
partner  retiring  from  activity  in  a  business  must 
get  some  return  from  it,  else  the  owner  has  no 
advantage  of  ownership.  Assuming  no  inter- 
est on  money  loans,  the  interest  on  the  value 
of  a  house  paid  in  the  form  of  rent  would  be  a 
sum  above  carrying  cost  and  depreciation  equal 
at  least  to  the  annual  increase  in  the  purchasing 
power  of  money.  This  shows  that  interest  does 
not  really  disappear,  but  only  becomes  hidden. 
It  cannot  disappear  till  value  disappears,  be- 
cause it  is  a  phase  of  value. 

Can  a  money  so  abundant  retain  its  purchas- 
ing power?  To  be  on  the  safe  side  in  our  con- 
sideration, let  us  assume  a  population  of  two 
hundred  millions  and  a  currency  volume  of  four 
hundred  billions.  As  a  considerable  percentage 
of  savings  would  then  be  in  money  it  is  easy  to 
conceive  such  volume  as  in  existence  without 
danger  of  depreciation.  In  fact,  unless  the 
volume  were  much  larger  than  $2,000  per  capita 
there  would  have  to  be  much  borrowing,  for  a 
few  years  of  very  modest  saving  in  the  form  of 
actual  cash  would  absorb  it  aU. 


xxin 
SUPPOSE 

OUPPOSE  we  do  not  wait  for  the  actual 
^  adoption  of  our  system  by  the  general 
government,  but,  instead,  put  it  into  partial  op- 
eration in  a  single  state  or  even  in  a  single 
county.  Periodically  we  have  conditions  in 
which  hundreds  of  thousands,  even  millions,  are 
obliged  to  seek  public  or  private  charity.  These 
men  and  their  families  must  not  be  allowed  to 
starve.  Even  we  money-grubbers  will  not  stand 
for  that,  though  to  a  certain  point  we  value 
money  above  men — until  their  sufferings  annoy 
us  because  they  can  no  longer  be  concealed. 

These  men  are  not  habitual  idlers  nor,  as  a 
rule,  improvident.  Most  of  them  are  as  honest 
as  the  rest  of  us — clerks,  artisans  and  laborers, 
who  are  forced  out  of  employment  by  the  par- 
tial suspension  of  business  in  every  line.  Some- 
thing is  the  matter  and  there  is  not  employment 
for  all.  At  such  time  the  primal  curse,  "in  the 
sweat  of  thy  face  shalt  thou  eat  bread,"  seems 
to  have  a  concealed  satire  more  sinister  than  the 
curse  itself,  for  these  men  have  no  opportunity 
to  sweat. 

They  and  their  families  are  suffering  for  the 
lack  of  things  to  use;  food,  clothing,  etc.,  though 

197 


198  NATURAL  MONEY 

at  such  time  there  is  always  a  superabundance 
of  such  things  in  store,  for  which  the  owners  can- 
not find  buyers.  Then  it  is  our  near-statesman 
and  grave  counselors  don  their  wise  looks  and 
tell  us  the  cause  of  the  trouble  is  that  "we  have 
been  going  at  a  too  rapid  pace  and  over-produc- 
tion has  resulted."  If  these  near-statesmen  and 
grave  counselors  are  right  the  people  are  hungry 
because  they  have  grown  too  much  food;  bare- 
footed because  they  have  made  too  many  shoes, 
and  ill-clothed  because  they  have  made  too  much 
clothing,  for  be  it  remembered,  the  people  who 
are  suffering  for  lack  of  things  to  use  are  the 
class  who  make  nearly  all  the  things  of  which 
there  are  at  the  very  time  "too  many." 

We  all  know  that  these  men  are  not  in  the 
breadline  because  too  much  wheat  was  grown; 
that  they  are  not  barefooted  because  too  many 
shoes  were  made,  and  ragged  because  there  are 
more  than  enough  clothes  for  all.  They  are 
there  because  of  a  damnable  system  that  robs 
them  of  a  large  part  of  the  fruit  of  their  labor 
at  all  times,  and  now  they  cannot  get  even  a 
little  except  as  a  hand-out,  for  in  addition  to  all 
other  causes  of  injustice  and  disaster,  the  money 
system  has  broken  down  (again),  grinding  the 
poor  and  ruining  thousands  who  are  wealthy. 

But  they  are  there  in  the  breadline. 

Suppose  that  at  such  time  a  superman  should 
appear  and  teach  every  honest  workman  out  of  a 


THE  PEACEFUL  SOLUTION    199 

job  a  method  whereby  each  day  he  could  extract 
gold  from  the  atmosphere  equal  to  two  gold 
dollars,  but  only  by  faithful  work.  I  presume 
everyone  would  say  that  such  intervention  would 
bring  incalculable  relief.  It  would  enable  the 
otherwise  idle  and  dependent  men  to  buy  and 
consume  the  "surplus"  in  the  warehouses  and  on 
the  shelves,  and  as  soon  as  this  surplus  had  been 
reduced  to  the  ordinary  reserve  the  wheels  of  in- 
dustry would  start  again,  for  prices  would  grad- 
ually go  up  to  normal  (money  value  going  down 
by  reason  of  increasing  volume  and  the  stock  of 
supplies  on  hand  being  consumed),  and  men 
would  return  to  private  employment  at  $2.00  a 
day  or  slightly  more. 

But  would  the  world  be  any  richer  for  the 
money  added?  Not  a  penny,  so  long  as  it  must 
be  used  as  money.  There  is  no  advantage  in 
doubling  the  number  of  tools  to  do  a  given  work. 
In  the  case  of  gold  I  suspect  that  the  only  in- 
crease of  total  value  is  what  goes  into  the  arts, 
but  apart  from  this, 

Is  it  not  plain  that  the  only  important  effect 
of  the  magic  increase  of  gold  money  is  to  work 
a  transfer  of  real  wealth  from  the  legal  owners 
of  the  "surplus"  stock  to  those  who  were  unable 
to  get  it  before  the  advent  of  the  superman? 

Is  it  not  plain  that  the  difficulty  is  not  "over- 
production," as  the  wise  near-statesmen  and 
grave  counselors  say,  but  an  inequity  in  the  dis- 


200  NATURAL  MONEY 

tribution  of  wealth  which  causes  a  slow  accumu- 
lation of  unconsumed  goods,  the  so-called  "over- 
production" surplus?  These  must  be  sold  at 
some  price,  and  as  the  market  cannot  take  all 
the  goods  at  full  price  because  the  total  of  wages 
does  not  equal  the  total  of  prices,  they  go  at  cut 
rates.  Many  manufacturers  cannot  meet  these 
prices,  even  by  running  without  profit,  so  they 
are  forced  to  shut  down  or  reduce  the  number 
of  employes — whence  the  breadlines.  And  when 
a  general  realization  of  the  situation  comes  there 
is  a  simultaneous  rush  for  money  to  make  settle- 
ment, the  money  system  breaks  down  and  the 
nightmare  is  being  lived,  not  dreamed. 

Suppose  that,  instead  of  intervention  by  a  su- 
perman, the  governments  (general,  state  and 
local)  decide  to  deal  with  the  situation  in  a  com- 
mon sense  and  businesslike  way.  This  may  seem 
like  exchanging  an  impossible  supposition  for  a 
preposterous  one,  but  we'll  do  it  anyway,  and 
assume  that  the  general,  state  and  local  govern- 
ments, instead  of  bidding  the  idle  walk  up  to 
the  soup  trough  and  exercise  the  right  of  an 
American  citizen  to  eat,  and  supplementing  this 
by  authorizing  the  predatory  chiefs  to  disregard 
the  law  and  devour  a  competitor  in  the  hope  that 
some  crumbs  may  fall  to  the  hungry  hordes — sup- 
pose that  instead  of  this  they  put  an  advertise- 
ment in  the  papers,  inviting  all  able-bodied  men 
who  are  unemployed  (or  employed  at  starvation 


THE  PEACEFUL  SOLUTION    201 

wages)  to  be  on  the  street  corner  at  eight  o'clock 
in  the  morning  ready  to  take  the  first  construc- 
tion auto  that  comes  along.  Call  them  "road 
rubbernecks"  if  you  like.  There  are  a  lot  of  them 
and  the  men  in  them  are  going  out  one,  two  or 
ten  miles  to  put  in  eight  hours  of  honest  work 
at  road  building  under  competent  engineers,  and 
they  are  going  to  get  two  dollars  each  at  the  end 
of  the  day  in  the  form  of  certificates  (at  least 
as  good  as  clearing-house  certificates).  Then 
the  rubbernecks  will  take  the  men  back  to  their 
homes,  and  their  wives  and  children  will  meet 
them  with  smiles,  and  they'll  have  a  square  meal 
instead  of  a  hand-out  from  the  relief  officer  or 
the  grub  agent  of  organized  charity;  and  a 
happy  evening  around  a  bright  light,  instead  of 
gloom  and  silence  in  the  dark  of  a  desolate 
home.  And  the  father  will  not  be  humiliated 
because  his  strong  arms  and  willing  hands  are 
unable  to  provide  food  and  warmth  for  wife  and 
little  ones,  and  the  mother's  heart  will  not  be 
wrung  with  anguish  because  the  future  is  so 
dark  for  their  brood;  and  the  little  ones  will  not 
ask  in  vain  for  food,  and  wonder  why  there  is 
no  light  in  papa's  and  mama's  faces  and  no 
smiles  with  their  good  night  kisses,  but  only 
tears.  These  little  ones  have  been  taught  that 
an  unsleeping  eye  is  ever  watchful  over  them, 
and  that  an  unseen  hand  will  provide  for  them 
even  as  for  the  ravens,  and  they  do  not  under- 


202  NATURAL  MONEY 

stand.  Daily  they  have  prayed,  "Give  us  this 
day  our  daily  bread,"  and  they  do  not  under- 
stand. They  know  nothing  and  their  parents 
know  little  of  the  unseen  hands  reaching  out 
from  the  bulwarks  of  privilege  to  despoil  them 
of  the  All-Father's  bounty  and  send  them  to 
bed  hungry. 

But  now  the  little  ones  are  happy,  for  they 
do  not  go  to  bed  hungry.  Papa  is  away  each 
day  and  mama  is  singing  over  her  household 
cares, — the  unsleeping  eye  is  watching  and  the 
unseen  hand  is  providing. 

"Give  us  this  day  our  daily  bread." 


xxrv 


"HE  THAT  HATH  EARS  TO  HEAR, 
LET  HIM  HEAR." 


upon  a  time  a  fair  maiden  wandered 
to  and  fro  in  the  earth,  living  upon  such 
berries,  nuts  and  fruits  as  she  could  find.  In 
spite  of  pinching  weather,  and  sometimes  scanti- 
ness of  food,  she  was  healthy,  strong  and  beau- 
tiful, for  she  was  the  daughter  of  a  god  and 
goddess,  though  she  deemed  herself  as  one  with 
the  birds  and  beasts  about  her,  differing  from 
all  only  as  they  differed  from  one  another. 

Seeing  her  loneliness,  her  parents  besought 
Jove  to  send  her  a  companion,  but  the  ruler  of 
Olympus  had  anticipated  their  desire.  He  did 
not,  however,  send  her  a  companion,  but  from 
her  own  flesh  and  bone  caused  to  spring  forth  a 
helpmate  for  her;  and  he  had  neither  hands  nor 
arms,  but  wings  where  arms  should  be.  At  first 
he  seemed  only  as  a  beautiful  child,  but  he  grew 
as  if  by  magic,  and  after  a  time  was  as  strong 
and  godlike  as  she  was  beautiful  and  fair. 

Then  Jove  came  down  from  Olympus  and 
blessed  them  and  bade  them  occupy  the  earth. 
To  the  woman  he  said:  Him  have  I  given  thee 
for  thy  husband.  Of  thy  flesh  and  bone  is 
he  created.  Thy  helper  he  shall  be,  to  make  thy 
toil  light  and  thy  heart  gladsome.  Thou  art 


204  NATURAL  MONEY 

Labora,  and  thou  shalt  work  with  thy  hands, 
but  he  shall  work  by  magic  because  he  has  no 
hands.  And  to  the  man  he  said:  Thou  art 
Capitulus;  forget  not  whence  thou  came;  and  to 
both:  Over  all  the  earth  I  give  you  dominion 
and  over  everything  in  the  earth,  for  you  and  all 
your  children  and  all  your  children's  children 
forever.  And  as  in  a  cloud  Jove  ascended  to 
Olympus. 

Children  were  born  to  them,  daughters  and 
sons,  and  they  called  their  names  according  to 
their  several  natures.  The  first  was  a  daughter, 
and  they  called  her  Comfort,  because  she  was 
the  constant  companion  and  solace  of  her 
mother.  The  next  was  a  son,  and  they  named 
him  Invention,  because  he  was  skillful  in  devices 
to  help  his  mother  with  her  toil;  and  she  loved 
to  call  him  Capitulilmanps,  because,  she  said 
laughingly,  he  was  her  husband's  hands,  which 
Jove  had  sent  after;  and  Architecton,  who  built 
them  beautiful  abodes.  And  of  daughters  there 
were  also  Sculpture,  who  fashioned  images  of 
stone  and  clay  to  look  like  themselves  and  the 
animals;  and  Paletta,  who  mixed  pastes  of 
earths  and  water  and  decorated  the  walls  and 
ceilings  of  their  houses,  to  look  like  whatsoever 
her  fancy  chose;  and  Musica  and  Poeta,  who 
delighted  their  parents  and  brothers  and  sisters 
even  more  than  the  others. 

Long  time  they  lived  happily,  but  by  and  by 


THE  PEACEFUL  SOLUTION    205 

Capitulus  bethought  him  of  Jove's  words,  "for- 
get not  whence  thou  came,"  and  being  puffed 
with  pride,  knew  not  that  they  were  words  of 
obligation,  but  mistook  them  for  words  of  dis- 
tinction, and  Labora,  not  knowing  her  divine 
origin,  was  humbled  and  abashed  in  his  presence, 
so  that  Capitulus  came  to  think  himself  fitted  to 
soar  like  the  birds,  and  more  and  more  to  despise 
Labora  the  more  she  humbled  herself  before 
him.  He  threatened  to  fly  away,  but  knew  that 
he  dare  not,  for  he  had  learned  that  absence 
from  Labora  soon  made  him  weak  unto  death. 
So  he  drew  apart  from  her,  but  only  a  little 
way,  and  Architecton  built  for  him  a  beautiful 
castle,  which  the  others  decorated  past  all  power 
of  words  to  describe  how  beautifully,  for  with 
bribes  he  enticed  them  away  from  their  mother, 
all  save  Comfort. 

To  this  castle  there  came  one  day  a  seeming 
beautiful  adventuress,  Luxury,  daughter  of  the 
old  tyrant  Injustice  by  his  harlot  Vanity.  With 
her  he  lived  in  open  adultery  and  shameless  dis- 
regard of  his  marital  obligation,  and  they  reared 
a  brood  of  bastards,  Idleness,  Indulgence,  Ex- 
cess, Greed,  Wantonness,  Insolence,  and  others, 
all  crooked  of  form  and  limb,  which  deformity 
they  sought  to  conceal  with  much  clothing;  and 
so  brutish  had  he  become  that  he  made  his  law- 
ful children  servants  to  them,  that  they  were 
corrupted  and  debased.  One  of  his  chief  de- 


206  NATURAL  MONEY 

lights  was  to  parade  his  paramour  and  their 
brood  before  the  eyes  of  his  lawful  and  despair- 
ing wife. 

Many  times  Labora  prayed  Jove  to  put  it 
into  the  heart  of  Capitulus  to  forsake  his  evil 
ways  and  return  to  her,  and  this  was  one  of  her 
prayers: 

O  mighty  Jove,  whom  all  the  gods  obey, 

Is  not  thy  love  far  reaching  as  thy  power? 

Jf  thou  didst  pity  for  a  maiden  have, 

Who  ne'er  knew  sorrow  and  scarce  felt  a  pang, 

Shall  wife  and  mother's  grief  appeal  in  vain? 

Didst  thou  not  find  Labora  in  the  wood, 

A  joyful  creature? — and  what  is  she  now? 

Then  were  the  animals,  the  birds  and  bees, 

Flowers,  trees  and  brooks  her  joy;  and  if  perchance 

Hunger  or  cold  annoyed  her,  'twas  but  brief 

And  left  no  trace  of  harm.     Did  she  complain, 

And  ask  a  husband  at  the  hand  of  Jove? 

Labora  knew  not  how  to  ask,  nor  knew 

That  Jove  could  answer  prayer — nor  knows  it  now, 

For  still  unanswered  all  her  prayers  remain, 

And  griefs  increase  with  prayers.     Couldst  thou  not  make 

A  constant  husband?    Canst  thou  not  reform 

An  errant  one?     Canst  thou  not  from  my  heart 

Take  portion  of  its  too-much  love  and  give 

To  Capitulns?     From  my  flesh  and  bone 

Thou  madest  his  body;  did  great  Jove  forget 

To  make  his  soul  proportioned?     Does  great  Jove 

Despise  Labora?     When  the  Don  roars 

His  mate  and  whelps  prick  up  their  ears  with  joy, 

But  poor  Labora  quakes  to  hear  the  voice 

Of  Capitulus.    Does  great  Jove  desire 


THE  PEACEFUL  SOLUTION    207 

That  I  should  fear  that  which  was  once  myself? 
Thou  didst  command  me  with  my  hands  to  toil, 
And  Capitulus  with  his  magic  art 
To  make  my  heart  and  toil  both  light.     Behold, 
My  heart  is  heavy,  and  my  fruitful  toil, 
Made  yet  more  fruitful  ever  by  his  art, 
Brings  bounty  but  to  him,  for  bribes  to  buy 
My  children  from  me  and  increase  my  griefs 
With  increase  of  insults  and  injuries. 
The  magic  which  thou  gavest  him  to  help, 
He  uses  to  despoil  me.     Dost  thou  hear 
Labora's  prayer,  O  Jove,  or  does  she  pray 
To  one  who  joys  in  sorrow?     Answer  me. 

Jove  did  not  answer,  and  Labora's  heart  was 
heavy  with  thoughts  of  her  wrongs.  But  the 
cup  of  her  sorrow  was  not  yet  full,  though  she 
thought  it  could  hold  no  more.  In  one  of  his 
orgies  Capitulus  bethought  him  of  Comfort, 
still  with  her  mother,  and  girding  himself,  bade 
Wantonness  accompany  him.  Coming  to  La- 
bora's  house,  now  a  hovel,  and  gaining  entrance 
by  lying  professions  of  friendship  and  reform, 
they  seized  Comfort,  dragged  her  away  to  the 
castle,  locked  her  in  a  dungeon  and  resumed 
their  carousal. 

This  was  more  than  patient  endurance  could 
bear,  and  following,  with  holy  rage  and  strength 
as  if  from  Jove,  Labora  slew  her  faithless  hus- 
band, his  brazen  consort,  their  ignoble  brood  and 
her  own  children  who  had  deserted  her.  Might- 
ily she  wreaked  vengeance  for  her  wrongs,  but 


208  NATURAL  MONEY 

by  and  by  the  scene  of  carnage  appalled  her, 
and  tenderly  gathering  together  the  lifeless 
forms  of  her  children,  bitterly  she  wept  that 
they  were  dead  and  smote  herself  that  she  had 
been  so  blind  and  indiscriminate  in  her  rage. 
She  would  have  prayed  to  Jove,  but  mindful  of 
her  still  unanswered  prayers  she  sat  in  stolid  sul~ 
lenness  of  heart,  like  one  bereft  of  reason,  till 
she  fell  asleep. 

Then  Jove  appeared  to  her  in  a  dream  and 
said:  Weep  not,  Labora,  for  the  great  Jove 
has  heard  thy  prayer.  This  man  that  thou  hast 
slain  is  not  Capitulus,  but  Capitulus'  captor, 
disguised  to  deceive  thee.  His  name  is  Monop- 
olus,  and  he  it  was  who,  seeing  Capitulus  puffed 
with  pride,  deceived  him  first,  then  locked  him 
in  a  cave.  Thou  shalt  roll  back  the  stone  from 
its  mouth,  and  Capitulus  shall  come  forth  to 
make  thy  heart  glad  and  be  thy  life's  light. 
Thy  children  I  will  restore  to  thee,  but  not  now. 
Awake,  Labora,  for  Capitulus  calls,  as  he  has 
called  these  many  years  in  vain,  for  you  to  come 
and  release  him. 

Up  sprang  Labora,  and  swiftly  as  the  hind  at 
play  she  ran  to  where  the  vision  had  directed 
her.  One  who  had  seen  that  stone  might  well 
have  thought  no  weaker  than  a  Hercules  could 
move  it,  and  mayhap  this  is  true,  but  love  is 
strong,  and  surely  what  Monopolus  had  put 
in  place  Labora  could  remove,  for  had  she  not 


THE  PEACEFUL  SOLUTION    209 

slain  him?  Here  am  I,  he  called,  and  as  she 
rolled  the  stone  away  came  forth.  And  they 
were  overjoyed. 

As  he  had  promised,  Jove  restored  her  chil- 
dren, and  they  were  very  happy;  but  Labora, 
mindful  of  her  griefs,  determined  to  keep  a 
strait  hand  upon  everything,  and  said  to  him: 
Because  of  your  pride  Monopolus  deceived  you 
and  caused  all  our  ills.  Henceforth  I  shall  take 
all;  your  keep  is  all  you  shall  have;  our  children 
are  mine,  all  mine.  Did  not  I  nourish  them  with 
my  body?  Did  not  I  bring  them  forth  in  travail? 

Capitulus  was  humbled  and  made  no  answer. 

For  a  time  they  were  happy,  but  by  and  by 
Capitulus  began  to  sicken  and  fall  away  and 
went  not  forth  with  Labora  to  the  field  nor  sat 
by  her  at  the  loom  as  of  old;  Invention  lost  his 
cunning  and  Architecton  became  an  idler  and  a 
vagabond.  Then  was  Labora  sore  distressed, 
and  said  to  Capitulus:  Why  is  it  that  of  late 
you  are  so  little  joyful;  that  you  sicken  and  fall 
away,  and  go  not  forth  to  the  field  with  me  nor 
sit  by  me  at  the  loom  as  of  old;  that  Invention 
has  lost  his  cunning  helpfulness,  and  Archi- 
tecton has  become  an  idler  and  a  vagabond? 

And  Capitulus  answered:  Labora,  my  offense 
was  grievous  and  I  have  no  right  to  complain, 
but  the  reason  I  sicken  and  pine  is  that  of  all 
we  create  you  give  me  only  what  I  spend  in 
striving;  every  joy  I  have  costs  me  a  part  of 


210  NATURAL  MONEY 

myself,  wherefore  may  I  not  be  joyful,  but  only 
as  a  statue  may  I  be.  You  are  strong  and  wax- 
ing stronger,  but  I  am  dying,  dying,  dying;  and 
when  I  am  dead,  you  and  our  children  cannot 
long  survive,  for  did  not  Jove  make  us  one  and 
inseparable? 

Labora  saw  that  he  spoke  truth,  and  there- 
after Capitulus  received  his  share,  but  as  time 
went  on  he  required  less  and  less. 

And  from  that  day  forth  all  was  joy  and 
gladness. 


A    000018406    9 


